The International Trade Between Vietnam and Japan

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY
THE INTERNATIONAL UNIVERSITY

SCHOOL OF INTERNATIONAL BUSINESS
THE INTERNATIONAL TRADE BETWEEN VIETNAM JAPAN AND ITS IMPACT ON VIETNAMS ECONOMIC
GROWTH
Advisor: Phd. Ho Nhut Quang

Students name: Vu Huy Hoang (BA070307)
ii
INTERNATIONAL TRADE BETWEEN VIETNAM AND JAPAN

AND
IMPACTS ON VIETNAMS ECONOMIC GROWTH
APPROVED BY Committee
Nguyn Qunh Mai, Ph.D, Chairman
APPROVED BY Advisor
H Nht Quang, Ph.D
H Nht Quang, Ph.D
H Nam Khnh Giao, Ph.D.
L nh Minh Tr, MBA.
Trn Tin Khoa, MBA.
THESIS COMMITTEE
iii
ACKNOWLEDGEMENT
First and foremost, I would like to show my sincere gratitude to my

advisor Mr. Ho Nhut Quang (Ph.D) for the continuous support of my research, for his
patience, motivation, enthusiasm, and knowledge. His guidance helped me in all the
time of research of this thesis.
Then it is pleasure to say thank to the Japanese Embassy in Vietnam as
well as Vietnam Bureau of Statistic and Customs, which has offered me provided very
important data to my thesis.. It is also the premise for me to approach this research
topic. And I would like to say thank to Mr Yasuaki Tanizaki, Japanese Ambassador in
Vietnam, has kindly guided me to finish my thesis.
Not forgotten to my family and friends for providing everything, such as
encouragement when I feel tired, disheartened. Besides that, this thesis would not
have been possible unless the support comes from internet, books, computers which
are
sources
to
complete
this
thesis.
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
1. INTRODUCTION . ......................................................................................................1
1.1. Rationale . ..............................................................................................................1
1.2. Problem statement..................................................................................................2
1.3. Objectives ..............................................................................................................2
1.4. Implication of the study ........................................................................................3
1.5. Scope of the thesis ................................................................................................3
1.6. Method of study ....................................................................................................3
2. LITERATURE REVIEW .............................................................................................4
2.1. Comparative advantage model and Heckscher Ohlin model ................................4
2.2. Keynes AD-AS model .........................................................................................8
2.3. Theoretical model on impacts of international trade between Vietnam and
Japan on economic growth .............................................................................................12
3. METHODOLOGY, RESULT AND DISCUSSION ..................................................15
3.1. The international trade between Vietnam and Japan in the period 1988-2010 ...15
3.1.1. The international commerce situation between Vietnam and Japan in general
from 1986 to 2010...........................................................................................................16
3.1.2. Imports and exports between two countries by commodities ..........................26
3.1.3. Current issues and advantages in trade between two countries........................37
3.2. Main finding of the thesis: the impact of international trade between Vietnam
and Japan on the Vietnams economic growth rate .......................................................44
IV. CONCLUSION AND RECOMMENDATION ......................................................54
4.1. Conclusion ...........................................................................................................54
4.2 Recommendation ..................................................................................................54
4.2.1. The investment in the country ..........................................................................55
4.2.2. The expenditure from the Government ...........................................................58
4.2.3. Import and Export between two countries how to improve it? .....................59
4.2.4. Economic growth development for promoting trade .......................................66
REFERENCES
APPENDIX
iv
LIST OF TABLES
Table 1.1: Annual GDPs growth rate in Vietnam .....................................................12
Table 3.1: Export-Import of Vietnam with Japan since 1988 to 2010 ......................17
Table 3.2: Trade balance between Vietnam and Japan, and Vietnam with other
countries from 1988 to 2010 ..........................................................................................21
Table 3.3: Proportion of Export-Import between Vietnam and Japan in the ExportImport turnover of Vietnam ...........................................................................................23
Table 4.1: Capital investment and development focus for 2006-2010.......................57
LIST OF FIGURES
Figure 1.1: Aggregate demand and aggregate supply .................................................9
Figure 1.2: The formation of the economic growth when AD curve shifts to the
right ................................................................................................................................11
Figure 1.3: The proportion of trade value between Vietnam and Japan compared
with trade value between Vietnam and other countries over the total trade turnover
value of Vietnam from 1988 to 2010 ..............................................................................13
Figure 3.1: The international trade between Vietnam and Japan from 1988 to 2010..
........................................................................................................................................19
Figure 3.2: Trade balance between Vietnam and Japan compared with total trade
balance among Vietnam and other countries from 1988 to 2010 ...................................20
Figure 3.3: the growth rate of trade of Vietnam-Japan compared with the growth
rate of Vietnam GDP by statistics .................................................................................25
Figure 3.4: The export proportion from Vietnam to Japan over total export turnover
of Vietnam since 1988 to 2010 .......................................................................................27
Figure 3.5: The change of some high value export goods to Japan in the period of
2007-2010 ......................................................................................................................28
Figure 3.6: Proportion of six high value exported products to Japan in 2007 and
2008 ................................................................................................................................29
Figure 3.7: Export proportion of important commodities of Vietnam to Japanese
market in 2009 and 2010 ................................................................................................31
Figure 3.8: Import proportion over total import turnover of Vietnam .......................33
Figure 3.9: The change of Vietnams imported goods from Japan in period of 20072010 ................................................................................................................................34
Figure 3.10: Proportion of Vietnams high imported goods value over the total
import turnover in 2007 and 2010 ..................................................................................35
Figure 4.1: Total export turnover of Vietnam to Japan in the first four months in
2010 and 2011 .................................................................................................................61
vi
CHAPTER I
INTRODUCTION
1.1. RATIONALE:
In the process of global economic integration, Vietnam is increasingly
asserted its importance to the world economy. Annual economic growth of Vietnam
increases steadily with 5.32% every year from 1994 to 2010 (according to the
statistics of Bureaus of Statistics based on constant 1994 price). In which as proved
the international trade plays an important role in the growth of economic. Vietnam has
traded with many countries and territories stretching from mysterious Asia to distant
America and gradually has met the global needs and global standard. In Asia, as
known the leader of economy after world-war II is Japan. The Japanese economy has
developed incredibly and strongly. From the past and until now, Vietnam who
traded with Japan has emerged from hundreds of years ago and seems to blind each
other.
As early as 16th century, contact between Vietnam and Japan came in the
form of trade. Along with Thailand and Malaysia, Japanese red seal ships frequented
Vietnamese ports. Vietnamese records show that when the port of Hoi An was opened
by Lord Nguyen Hoang in early 17th century, hundreds of Japanese traders were
already residing there. The two countries enjoy the firm degree of friendship. Shogun
Tokugawa Ieyasu exchanged amicable and gifts with Lord Nguyen. His son, Lord
Nguyen Phuc Nguyen would marry his daughter, Princess Ngoc Khoa to
AkariShutaro, an eminent Japanese trader. Traders from Japan often donated money
to the locals and were treated well. Many settled and assimilated into their new
surroundings.
When Japan entered a period of self-isolation, trade continued to flow,
either through the planning of permanent residents or through immediate Dutch
merchants. However, in 1685, the Tokugawa Shogunate became aware of nations
overexploited silver and copper mines, and a trade restriction was put in place. Due to
the importance of these metals, the new regulation dampened trade between Japan and
Vietnam, as well as much of South Asia. However, the economic and culture
exchange between two countries were difficult until 19th century.
To 20th century, the relationship between two countries was reconnected
again but full of political color. That was the time when Japan became a powerful
1
capitalist which promoted the movement of learning overseas and highly appreciated
Japan by Vietnamese patriots such as PhanChau Trinh, PhanBoiChau It was also
the period that Japanese Fascist attacked Vietnam and many Asian countries in World
War II. This was a darkest time in relationship of both countries.
Since World War II to just before both countries signed the Agreement of
formal diplomatic relations foundation on 09/21/1973, slightly and slowly did the
relationship between Vietnam and Japan maintained. The main reason was that
unstable political causes of Cold war among two biggest systems: Capitalist versus
Socialist. Japan totally depended on the power of the US while North of Vietnam was
on behalf of Soviet Unions in the previous Vietnams war.
1.2. PROBLEM STATEMENT:
The Vietnams economy is on the first step of the way to integrate with
global economy. It opens challenges and opportunities for Vietnamese enterprises to
compete with international companies. Parallel with this, the international trade is the
keyword for development of economy including the international trade between
Vietnam and Japan.
Over the evidence above, we can see the relation in commercial and
political aspect as well as the importance of trade between two countries in the
history. As a matter of fact, since Vietnams implementation of the renovation from
1986 until now, there was an important turning point to Vietnams economy, thats
economic integration and international trade has have opportunities to develop and
contribute substantial changes to agriculture and fishery, import and export, science
and technology, healthcare and education, and so, the question is
raised, with the development of international trade among Vietnam and the globe, at
the
country
level,
does
the international
trade between Japan
and Vietnam really contribute to the economic growth in Vietnam or not? This thesis
will prove and find out elements of the trade of both countries that impact on Vietnam
economic growth rate.
1.3. OBJECTIVES:
To answer the research question: Does the international trade between
VN and Japan contribute to economic growth in Vietnam, my thesiss objectives will
be:
+ To summarize all theoretical points of international trade theories
and growth theories.
+ To review and analyze the current situation of international trade
between Vietnam and Japan in the period from 1988-2010
+ To construct an econometric model measuring impact of
international trade between Vietnam and Japan on economic growth the
country.
+ To suggest policy implications based on the model results.
2
1.4. IMPLICATION OF THE STUDY:

The purpose of this study is to improve the aspect of the importance of
international trade between Vietnam and Japan in the whole of Vietnams global trade
to the economic growth of Vietnam. This thesis may give the ideas and suggestions
for trading between two countries and tend to give supports to the macroeconomics of
Vietnam.
1.5. SCOPE OF THE THESIS:
Subject: International trade between Vietnam and Japan.
Period of time: from 1988 to 2010.
1.6. METHOD OF STUDY:

+ Quantitative Statistics: using regression equation to find evidence to
prove the contribution of both countries trade to GDP
+ Descriptive Statistic: using tables, figures and various expressions in
analyzing, comparing, summarizing the data.
+ Data collection: Secondary Data Statistical data and others previous
study.
CHAPTER II
LITERATURE REVIEW
To explain the pattern of trade between Vietnam and Japan, these models
are used in the thesis:
- Comparative advantage model and Hecksher Ohlin model:
+ Comparative advantage model: giving the absolute advantage of
each country, what is the strength in productivity, what kinds of goods have been
traded
+ Hecksher Ohlin model: giving the answer and relation of
Vietnams labor force and Japans capacity
- Keynes AD-AS model: explaining how economic growth happens and
what elements impact on this growth.
- Theoretical models on impacts of international trade between Vietnam
and Japan on Economic growth.
2.1. COMPARATIVE ADVANTAGE MODEL AND HECKSHER OHLIN
MODEL:
The reason that comparative advantage and Hecksher Ohlin model are
mentioned is that they give explanation about the trade between Vietnam and Japan. It
is a fact that Vietnam has strength in abundant of young labor force and rich natural
resources as well as Japan dominate the technological science and abundant of capital
flow. With the advantages of not far apart geographically and the development of air
transportation and shipping, both economies in two nations therefore seems to rely on
each other.
2.1.1. THE COMPARATIVE ADVANTAGE:
In economics, the law of comparative advantage says that two countries
(or other kinds of parties, such as individuals or firms) can both gain from trade if, in
the absence of trade, they have different relative costs for producing the same goods.
Even if one country is more efficient in the production of all goods (absolute
advantage), it can still gain by trading with a less-efficient country, as long as they
have different relative efficiencies.
Comparative advantage was first described by Robert Torrens in 1815 in

an essay on the Corn Laws. He concluded it was to England's advantage to trade
with Portugal in return for grain, even though it might be possible to produce that
grain more cheaply in England than Portugal.
However, the concept is usually attributed to David Ricardo who explained
it in his 1817 book On the Principles of Political Economy and Taxation in an
example involving England and Portugal. In Portugal it is possible to produce
both wine and cloth with less labor than it would take to produce the same quantities
in England. However the relative costs of producing those two goods are different in
the two countries. In England it is very hard to produce wine, and only moderately
difficult to produce cloth. In Portugal both are easy to produce. Therefore while it is
cheaper to produce cloth in Portugal than England, it is cheaper still for Portugal to
produce excess wine, and trade that for English cloth. Conversely England benefits
from this trade because its cost for producing cloth has not changed but it can now get
wine at a lower price, closer to the cost of cloth. The conclusion drawn is that each
country can gain by specializing in the good where it has comparative advantage, and
trading that good for the other.
Link to the thesis, basing on the Comparative advantage model, it can be
explained the pattern of trade between Vietnam and Japan throughout importing and
exporting goods and services that each country has its own advantage. For example:
Vietnam has a strong advantage in growing rice because of the tropical climate and
traditional perennial agriculture while Japan is not strong in this term but those
companies in Japan are better than that in Vietnam in producing semi-conducts chips.
Hence, Vietnam will focus on its advantage and tends to import semi-conducts chips
while Japan import rice for their market needs.
2.1.2. THE HECKSCHER OHLIN MODEL: is a general equilibrium mathematical
model of international trade, developed by Eli Heckscher and Bertil Ohlin at
the Stockholm School of Economics. It builds on David Ricardo's theory
of comparative advantage by predicting patterns of commerce and production based
on the factor endowments of a trading region. The model essentially says that
countries will export products that use their abundant and cheap factor(s) of
production and import products that use the countries' scarce factor(s).
Relative endowments of the factors of production (land, labor, and capital)
determine a country's comparative advantage. Countries have comparative advantages
in those goods for which the required factors of production are relatively abundant
locally. This is because the profitability of goods is determined by input costs. Goods
that require inputs that are locally abundant will be cheaper to produce than those
goods that require inputs that are locally scarce.
5
The 222 model

The original H-O model assumed that the only difference between
countries was the relative abundances of labor and capital. The original Heckscher
Ohlin model contained two countries, and had two commodities that could be
produced. Since there are two (homogeneous) factors of production this model is
sometimes called the "222 model".
The model has variable factor proportions between countries: Highly
developed countries have a comparatively high ratio of capital to labor in relation
to developing countries. This makes the developed country capital-abundant relative
to the developing nation, and the developing nation labor-abundant in relation to the
developed country.
With this single difference, Ohlin was able to discuss the new mechanism
of comparative advantage, using just two goods and two technologies to produce
them. (One technology would be a capital intensive industry, the other a labor
intensive business - see "assumptions" below).
Labor mobility within countries
Within countries, capital and labor can be reinvested and re-employed to
produce different outputs. Like the comparative advantage argument of Ricardo, this
is assumed to happen costlessly.
If the two production technologies are the arable industry and the fishing
industry it is assumed that farmers can shift to work as fishermen with no cost, and
vice versa.
Capital mobility within countries
It is further assumed that capital can shift easily into either technology, so
that the industrial mix can change without adjustment costs between the two types of
production.
For instance, if the two industries are farming and fishing it is assumed
that farms can be sold to pay for the construction of fishing boats with no transaction
costs.
Capital immobility between countries
The basic HeckscherOhlin model depends upon the relative availability
of capital and labor differing internationally, but if capital can be freely invested
anywhere competition (for investment) will make relative abundances identical
throughout the world. (Essentially, Free Trade in capital would provide a single
worldwide investment pool.)
Differences in labor abundance would not produce a difference

in relative factor abundance (in relation to mobile capital) because the labor/capital
ratio would be identical everywhere. (A large country would receive twice as much
investment as a small one, for instance, maximizing capitalist's return on investment).
As capital controls are reduced, the modern world has begun to look a lot
less like the world modeled by Heckscher and Ohlin. It has been argued that capital
mobility undermines the case for Free Trade itself, Capital is mobile when:
There are limited exchange controls
Foreign Direct Investment (FDI) is permitted between countries, or

foreigners are permitted to invest in the commercial operations of a
country through a stock or corporate bond market
Labor immobility between countries
Like capital, labor movements are not permitted in the Heckscher-Ohlin
world, since this would drive an equalization of relative abundances of the two
production factors, just as in the case of capital immobility above. This condition is
more defensible as a description of the modern world than the assumption that capital
is confined to a single country.
Link to the thesis, H-O model explains the relationship between Vietnams
labor force and Japans technology and capacity. In Vietnam, for many years,
unskilled workers constituted large proportion of labor force and they have worked
for jobs unrequired much skill and knowledge in information technology. Hence it has
found specific economic patterns like jobs required a lot of labors such as farmers,
construction workers, workers in factories of chemicals, leathers, garments, roads and
bridges, mining workers, cargo handling The labor force in Vietnam is abundant
and even though excesses. While Japan with the advantage of high technology and
capitals but low number of young labors tends to produce the high-tech products and
services required less labor. Besides, nowadays Japan is considered the aging
population country and they really need more labors for the industry.
More importantly, Vietnam with the vision to become a new industrial
country needs more and more investments of capitals and technology into the industry
as well as using up excess human resources. Similarly, Japan has abundant capitals
and they want to invest these capitals for earning profits and outsourcing in other
country for competing in global market. Moreover, the Japans industry needs more
common labors to solve the serious problem of labor shortages. Therefore Vietnam
and Japan have chances to exchange labors, capitals, and technology to each other.
Excess labors problem can be solved by sending them to work in Japan while the
7
abundant capitals and technology come to Vietnam for developing the domestic
industry as well as profits turning back to foreigner. Hence both sides mutually get
benefit.
2.2. KEYNES AD-AS MODEL:
The AD-AS or Aggregate
Demand-Aggregate
Supply
model is
a macroeconomic model that explains price level and output through the relationship
of aggregate demand and aggregate supply. In addition, the AD-AS model will
explain how the GDP growth rate happens and show what element will affect that
growth on GDP.
The AD/AS model is used to illustrate the Keynesian model of
the business cycle. Movements of the two curves can be used to predict the effects
that various exogenous events will have on two variables: real GDP and the price
level. Furthermore, the model can be incorporated as a component in any of a variety
of dynamic models (models of how variables like the price level and others evolve
over time). The AD-AS model can be related to the Phillips curve model of wage or
price inflation and unemployment.
Figure 1.1: Aggregate demand and aggregate supply

Aggregate demand curve
The AD curve is defined by the IS-LM equilibrium income at different
potential price levels. The equation for the AD curve in general terms is:
where Y is real GDP, M is the nominal money supply, G is

real government spending, T is an exogenous component of real taxes levied, P is
the price level, and Z1 is a vector of other exogenous variables that affect the location
of the IS curve (exogenous influences on any component of spending) or the LM
curve (exogenous influences on money demand). The real money supply has a
positive effect on aggregate demand, as does real government spending (meaning that
when the independent variable changes in one direction, aggregate demand changes in
the same direction); the exogenous component of taxes has a negative effect on it.
Aggregate supply curve

The aggregate supply curve may reflect either labor market disequilibrium
or labor market equilibrium. In either case, it shows how much output is supplied by
firms at various potential price levels.
The equation for the aggregate supply curve in general terms for the case
of excess supply in the labor market, called the short-run aggregate supply curve, is
Where W is the nominal wage rate (exogenous due to stickiness in the

short run), Pe is the anticipated (expected) price level, and Z2 is a vector of exogenous
variables that can affect the position of the labor demand curve (the capital stock or
the current state of technological knowledge). The real wage has a negative effect on
firms' employment of labor and hence on aggregate supply. The price level relative to
its expected level has a positive effect on aggregate supply because of firms' mistakes
in production plans due to mistakes in prediction of prices.
Shifts of aggregate demand and aggregate supply:
The following summarizes the exogenous events that could shift the
aggregate supply or aggregate demand curve to the right. Of course, exogenous events
happening in the opposite direction would shift the relevant curve in the opposite
direction.
Shifts of aggregate demand
The following exogenous events would shift the aggregate demand curve
to the right. As a result, the price level would go up. In addition if the time frame of
analysis is the short run, so the aggregate supply curve is upward sloping rather than
vertical, real output would go up; but in the long run with aggregate supply vertical at
full employment, real output would remain unchanged.
9
Shifts of aggregate supply

The following exogenous events would shift the short-run aggregate
supply curve to the right. As a result, the price level would drop and real GDP would
increase.
An exogenous decrease in the wage rate
An increase in the physical capital stock
Technological progress improvements in our knowledge of

how to transform capital and labor into output
The following events would shift the long-run aggregate supply curve
to the right:
An increase in population
An increase in the physical capital stock
Technological progress
Figure 1.2: The formation of the economic growth when AD curve shifts to the right.
Link to the thesis, as is shown in the figure 1.2, the shift of AD curve to
the right will make an increase in GDP, and Keynes theory asserts that AD curve
includes following factors that make the change: Consumption C, Investment I,
Government expenditure G, Import IM and Export EM.
AD = C + I + G + (IM-EX)
10
In that, (IM-EX) is the trade surplus or trade deficit. Therefore, AD can be

a function that is affected by the following factors:
AD = f(C, I, G, (IM + EX))
In which, (IM + EX) is the countrys value of international trade.
Moreover, the international trade of Vietnam includes two more factors:
trade of Vietnam and Japan, which is denoted VNJP, and trade of Vietnam and other
countries, which is denoted VNOT:
GDP growth rate = f(AD) = f(C, I, G, VNJP, VNOT)
The increase or decrease of one to all of factors will give contribution to
the shift of AD curve or GDP growth rate. To more details, the following part will
raise the main purpose of this thesis by theory of AD-AS model.
2.3. THEORETICAL MODEL ON IMPACTS OF INTERNATIONAL TRADE
BETWEEN VIETNAM AND JAPAN ON ECONOMIC GROWTH:
Based on agreements signed over years such as the annual ODA loan
agreement or bilateral economic partnership agreement on 2008, it is clearly that
commercial association between Japan and Vietnam has been increasing. When
Aggregate demand curve shifts to right and we assume that Aggregate supply curve
keeps stable, it creates a growth in GDP. The AD curve shift describes the increase in
GDP year by year. As it shown in the table () below, GDPs growth rate in Vietnam
has rose up annually from the year of 1998 to 2009, increasing about 6.9% in average
even though Asian economic crisis in early 1998 and financial global crisis in 2008.
Table 1.1: Annual GDPs growth rate in Vietnam
Year
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Growth
rate
5.8
under %
4.8
6.8
6.9
7.1
7.3
7.8
8.4
8.2
8.5
6.2
10.17 6.8
(Source: Bureau of Statistics)

The increase in GDP is the result of the increase in domestic consumption,
government expenditure, investment on physical capital, international trade, foreign
direct investment and some other factors. The change in economic patterns in 1986
had made open period for Vietnams economics, bring about the development of
foreign trade that leads to the rising in many factors. For example: international trade
11
promoted spending from government to build better infrastructures, encouraged

investment in knowledge and technology, stimulated exchange, trade and
consumption of goods...In foreign trade, international trade between Vietnam and
Japan constitutes at least 5.2% to maximum 20,8% and every year average 14% in
general international trade of Vietnam (Figure 1.3). This is high proportion of
contribution if it is said in aspect of trade numbers. However, international trade is an
important part to increase GDP every year and people wonder that how trade between
Vietnam and Japan contribute great to this increase or it is just a small part in
international trade and has no affects to the economics growth rate.
Figure 1.3: The proportion of trade value between Vietnam and Japan compared with
trade value between Vietnam and other countries over the total trade turnover value
of Vietnam from 1988 to 2010.
Based on AD-AS model, it should be made clear that with the growth rate
of international trade between Vietnam and Japan, does it impact on the change in
Vietnam economics growth rate in general and GDP in depth?
Therefore to make this point more clearly, the AD curve shift which
explains the change in economics growth rate includes following factors that should
be considered in real GDP: international trade between Vietnam and Japan (VNJP),
international trade among Vietnam and other countries (VNOT), consumer spending
(C), government expenditure (G), foreign direct investment (F), investment (I) and
domestic productivity (GDP over employees) (P):
GDP = f(VNJP, VNOT, G, I, P, C, F)
Using regression approach, we can express GDP now as to be the dependent
variable which depends on the following independent variables:
12
GDP = a + b0 C + b1 I + b2 G+ b3 FDI + b4 P + b5 VNJP + b6 VNOT + c

Running Regression equation will give 6 necessary main tests in: T-test, Ftest, Dublin Watson index, R-squared, White Heteroskedasticity test and values of
Mean, Median, Kutoris, Jarque-Bera which mean that:
The T-test: is any statistical hypothesis test in which the test
statistic follows a Student's t distribution, if the null hypothesis is supported. It is most
commonly applied when the test statistic would follow a normal distribution if the
value of a scaling term in the test statistic were known. When the scaling term is
unknown and is replaced by an estimate based on the data, the test statistic (under
certain conditions) follows a Student's t distribution.
In this case, the T-test will prove the value of the variable in the equation
or individual coefficient in equation. If the T-test of independent variables is in
Students t distribution interval index, it can be said that this variable is no value in
statistics. Or if the test of independent variable is negative with the function, this trend
of variable will go in opposite way of the function like GDP increases with the
reduction of government expenditure, and vice versa.
The F-test: is any statistical test in which the test statistic has an Fdistribution under the null hypothesis. It is most often used when comparing statistical
models that have been fit to a data set, in order to identify the model that best fits
the population from which the data were sampled. The F-test measures the statistical
significance of the entire regression equation rather than of each the individual
coefficient. Therefore this test explains the value of whole equation with the critical
F-value of degrees of freedom should be higher than the critical F-value in F
distribution table.
The R-squared:
In this case, R-squared values will imply how much proportion of all
independent variables may affect the change in function. A high R-squared (between
85 and 100) indicates the fund's performance patterns have been in line with the
index. A fund with a low R-squared (70 or less) doesn't act much like the index. For
example, if R-squared value equal 80%, it means that the increase or decrease of all
independent variables in equation explains 80% in change in GDPs growth rate.
The Dublin Watson statistics: is a test statistic used to detect the
presence of autocorrelation (a relationship between values separated from each other
by a given time lag) in the residuals (prediction errors) from a regression analysis.
The White Heteroskedasticity test: to check the phenomenon of unequal
variances from the statistical significant of each independent variable tested.
Observing the values of Mean, Median, Kutoris, Jarque-Bera to test
the normal distribution of error of residuals from initial
testing
hypothesis
13
independent variables do not impact on dependent variables, and multicollinearity

tested.
With the number of data collected from 1988 to 2009 by Bureau of
Statistics, it will turn to regression equation methodology concerned in next chapter.
14
CHAPTER III
METHODOLOGY, RESULT AND DISCUSSION
In this chapter, it will be discussed about the international trade between

Vietnam and Japan from 1988 2010, pros and cons as well as difficulties and
barriers, and results analysis of trade between two countries after running regression
equation.
3.1. THE INTERNATIONAL TRADE BETWEEN VIETNAM AND JAPAN IN

THE PERIOD 1988 2010
Introduction about Japan
Japan is a country which has a hundred of islands, surrounded by Pacific
ocean and neighboring countries with bordering the sea such as China, Russia or
Taiwan. It is cold climate in Japan, has many volcanoes and unstable geological
layers; Japan was considered as a country immensely rich in precious metals and
natural resources but strong in economics since the 1960s. The Japanese economy is
the third largest in the world after the United States and China but ahead of Germany
at 4th. In 2010, the total exports was estimated $765.2 billion while it was $636.8
billion in imports, hence Japan has got a great trade surplus. According to the
International Monetary Fund, the countrys per capita GDP was at $32,608 or the 23rd
highest in 2009. The main imports of Japan are machines, equipment, fuel, food
(especially beef), chemical, textile materials and resources for the domestic industry.
In general, the largest trading partner of Japan is China.
The banking service, insurance, real estates, retails, traffic transportation
and infrastructure, telecommunications are large industries in Japan. Japan has a great
capacity in the industry, and this is a head-quarter of the most advanced technology
manufacturers in the world such as the company of motor vehicles, electronic
equipment, machine tools, irons, non-metal, ship industry, chemical, textile, processed
food. This is also the head-quarter of multinational companies and many commercial
products in the field of technology and machine. For a long time ago the construction
has become a largest industry in Japan as well as the traffic in Japan fast raised.
Japan is considered as the biggest bank agency in the world, Mitsubishi
UFJ financial group have the capital estimated over $1.7 thousand billion. Besides, it
is the second largest stock market exchange in the world Tokyo stock market.
15
Moreover, Japan is world leader in the field of scientific research,

machinery technology, medicines research. Many important contributions in
technology of Japan are inventions in the field of electronics, vehicles, machines,
industrial robot, optical, chemicals, semi-conducts and metals in which Japan takes a
world leader in robot science.
3.1.1. THE INTERNATIONAL COMMERCE SITUATION BETWEEN
VIETNAM AND JAPAN IN GENERAL FROM 1986 TO 2010:
This part will give an overall situation to generalize the trade relation,
import and export turnover value, trade balance between two countries.
3.1.1.1. THE COMMERCIAL RELATION BETWEEN VIETNAM AND
JAPAN SINCE 1986:
Since 1986 until now, after Vietnam made the new economic policy to
change the orientation to the market economy and implemented opening policies, it
was an important turning point to Vietnams economic development for both internal
and external. The commercial relationship between Vietnam and Japan also entered a
new period with the strong increase in trade volumes and rising attention from
Japanese enterprises to Vietnamese market. Hence, in 1988, although it was the first
time to export crude oil, Vietnam exported it to Japan.
In October 1990, the first time in the history relationship of both countries,
it was a good dimension by a visit of Foreign minister and Deputy Prime minister
Nguyen Co Thach to Japan. This visit opened a new period in relation Vietnam
Japan. In June 1991, Foreign minister Makayama came to our countries. These steps
of the both governments were the driving force of economic cooperation between two
countries and there were marked improvement in both trade and investment.
The relationship between Vietnam and Southeast Asia countries also
improved since Vietnam withdrew soldiers from Cambodia. Since 1992 there were
rising visits to each other among the Vietnamese government and ASEAN countries.
The day 22 in July 1992, Vietnam signed the Bali Conventions that opened for the
integration process of Vietnam into the Southeast Asian area and became the ASEAN
observer. Regions and world increasingly support the trade relations of Vietnam and
Japan. ASEAN countries now are friends of Vietnam, these factors set the stage for
Japan to widely increase trade cooperation relation with Vietnam.
16
In November 1992, Japanese government decided to aid Vietnam again,

ending 14 years interruption (1978-1992). The following was ODA, the Japanese
government declared to eliminate regulation limited export in some high-tech goods,
strategic goods to Socialist countries including Vietnam. From this time, Vietnam
could import machines, modern equipment from Japan to serve the cause of building
socialism in Vietnam. Generally, in many years from 1988 to 2010, the turnover
between two countries has steadily grown up in both import and export. The table 3.1
will show the international trade between Vietnam and Japan in general.
3.1.1.2. THE VIETNAMS TOTAL EXPORT-IMPORT TURNOVER VALUE
WITH JAPAN FROM 1988 TO 2010:
Year Import Export
(Y)
Total
trade
Y/(Y-1) Year
(Y)
(%)
Import
Export Total
trade
Y/(Y-1)
(%)
2000
2300.9
2575.2
4876.1
143.2
1988
138.8
60.7
199.5
1989
105.6
261
366.6
183.8
2001
2183.1
2509.8
4692.9
96.2
1990
169
340.3
509.3
138.9
2002
2504.7
2437.0
4941.7
105.3
1991
157.7
719.3
877.0
172.2
2003
2982.1
2908.6
5890.7
119.2
1992
239.4
833.9
1073.3
122.4
2004
3552.6
3542.1
7094.7
120.4
1993
452.3
936.9
1389.2
129.4
2005
4074.1
4340.3
8414.4
118.6
1994
585.7
1179.3
1765.0
127.1
2006
4702.1
5240.1
9942.2
118.2
1995
915.7
1461.0
2376.7
134.7
2007
6188.9
6090.0
12278.9
123.5
1996
1260.3
1546.4
2806.7
118.1
2008
8240.3
8467.8
16708.1
136.1
1997
1509.3
1675.4
3184.7
113.5
2009
7468.1
6291.8
13759.9
82.4
1998
1481.7
1514.5
2996.2
94.1
2010
9016.1
7727.7
16743.8
121.7
1999
1618.3
1786.2
3404.5
113.6
Table 3.1: Export-Import of Vietnam with Japan since 1988 to 2010

The table shows the steady increase in import and export of Vietnam to the
Japanese market from 1988 to 2010. However, because of the Asian economic crisis
17
in 1988 and Global financial crisis in 2008 that impacted on the trade between two
countries, hence the total turnover of Vietnam and Japan decreased from the previous
year, particularly reducing about 200 million dollars in 1998 and 300 million dollars
in 2009. Besides, it was an important year 1992 that not only a turning point in
relation but also it was the remarked year that Vietnam became one of ten countries
which received bilateral ODA from Japan with 291.14 million dollars.
Beside the reasons of economic hardship on both countries, it was the lack
of the ability to approach and enter the market and the way to sale and introduce
goods to Japanese was difficult. Late delivery, insufficient numbers, difference among
samples and sales, and the lack of using language were the existing barriers.
The structure in import and export of Vietnam and Japan in the first
fourteen years from 1988 to 2002 were not much change. The main goods that
Vietnam exported to Japan in this period were: seafood, garments, crude oil, electrical
wires and cables. However, the following years, it was new trend in exporting sugar,
rice, peppers to Japanese market. Although the volume of these items was relatively
small, it would be a good signal for Vietnamese export if it could keep this stable
growth.
Japan has been one of the largest partners of Vietnam for many years and
has stayed in the leading trade with Vietnam since 1990. The total two-way trade
turnover reached 199.5 million dollars in 1988, 3404.5 million dollars in 1999 and
more than 16.7 billion dollars in 2010. This is an impressive number in the economic
relation of both countries, increasing 84 times from the near starting point 200 million
dollars for the period of 22 years.
18
3.1.1.3. TRADE BALANCE BETWEEN VIETNAM AND JAPAN FROM 1988

TO 2010:
(Source: Bureau of Statistics) (Unit: USD)
Figure 3.1: The international trade between Vietnam and Japan from 1988 to 2010
As is shown in the figure 3.1, the export turnover of Vietnam to Japan in
2008 increase 136%, the trade balance between two countries has been still titled
toward Vietnam and in 2008 Vietnam had trade surplus toward Japan with more than
200 million dollars. But Vietnam had trade deficit from Japanese export in 2002,
2003, 2004 and 2010 with about 67, 73.5, 10.5 and nearly 100 million dollars in that
order. Moreover, in two recent years 2009 and 2010, this trade deficit of Vietnam with
Japan dramatically increased, with 1176.3 and 1288.4 million dollars respectively. In
the starting point in 1998, the growth rate of importing was always higher than the
growth rate of exporting. The reason is that from this time, Vietnam started focusing
on importing modern machines and technologies to serve the modernization of the
country. In general, the export from Vietnam to Japan has been much more than
import until now.
19
Figure 3.2: Trade balance between Vietnam and Japan compared with total trade
balance among Vietnam and other countries from 1988 to 2010.
The growth rate of trade relation between Vietnam and Japan also
expressed in the proportion of export turnover and import turnover that accounted for
in the foreign trade turnover of Vietnam. The export and import turnover of Vietnam
and Japan rapidly increased, it has been shown the increase year over year from 1988
until now, excluding years 1998, 2001 and 2009 because of Asia economic crisis,
terrorist events to the WTO center and Pentagon in the USA, and Global financial
crisis. For recent 10 years since 2000 until 2010, the total export-import turnover of
both countries has increased 3.4 times from the starting point 4.8761 billion dollars to
the highest 16.7438 billion dollars (table 3.1). The trade balance between two
countries mainly trade surplus with large volumes, such as the trade surplus in 2001
was 326.1 million dollars while the trade balance of Vietnam in general mostly was in
trade deficit (figure 3.2).
20
(Unit: millions USD)

Vietnam Japan
Year
VNJP-IM
VNJP-EX
1988
138.8
1989
Vietnam and other countries

VNOT-IM
VNOT-EX
60.7
TRADE
BALANCE
-78.1
2617.9
977.5
TRADE
BALANCE
-1640.4
105.6
261
155.4
2460.2
1685
-775.2
1990
169
340.3
171.3
2583.4
2063.7
-519.7
1991
157.7
719.3
561.6
2180.4
1367.8
-812.6
1992
239.4
833.9
594.5
2301.3
1746.8
-554.5
1993
452.3
936.9
484.6
3471.7
2048.3
-1423.4
1994
585.7
1179.3
593.6
5240.1
2875
-2365.1
1995
915.7
1461.0
545.3
7239.7
3987.9
-3251.8
1996
1260.3
1546.4
286.058
9883.258
5709.5
-4173.758
1997
1509.3
1675.4
166.116
10083.02
7509.6
-2573.416
1998
1481.7
1514.5
32.837
10017.94
7845.8
-2172.137
1999
1618.3
1786.2
167.9
10123.8
9755.2
-368.6
2000
2300.9
2575.2
274.3
13335.6
11907.5
-1428.1
2001
2183.1
2509.8
326.701
14034.9
12519.4
-1515.501
2002
2504.7
2437.0
-67.7
17240.9
14269.1
-2971.8
2003
2982.1
2908.6
-73.5
22273.7
17240.7
-5033
2004
3552.6
3542.1
-10.5
28416.2
22942.9
-5473.3
2005
4074.1
4340.3
266.2
32687
28106.8
-4580.2
2006
4702.1
5240.1
538
40189
34586.1
-5602.9
2007
6188.9
6090.0
-98.9
56575.8
42471.4
-14104.4
2008
8240.3
8467.8
227.5
72473.5
54217.3
-18256.2
2009
7468.1
6291.8
-1176.3
62480.7
50804.5
-11676.2
2010
9016.1
7727.7
-1288.4
74983.9
63902.3
-11081.6
Table 3.2: Trade balance between Vietnam and Japan, and Vietnam with other
countries from 1988 to 2010. (Source: Bureau of Statistics)
21
Due to the economic development, Vietnam always was always in trade

deficit in general. As regard to the trade relation of Vietnam and Japan, it was a
different story, the trade balance of Vietnam almost has been in positive numbers in
15 years rather than negative numbers in 7 years. But these statistics are not really
meaningful because Vietnam is in the process to become a new industrial country.
Hence Vietnam potentially imports more and more goods such as heavy industrial
machines and equipment for serve the vision of the country. Japan is the country of
technology and science, so Vietnam needs to learn and imports scientific technology
and innovative products from Japan then the trade balance of Vietnam and Japan will
tend to trade deficit to Vietnam. However, Vietnam can reduce the trade deficit to the
maximum by developing more and more in the agriculture and light industry that
Japan had left.
3.1.1.4. PROPORTION OF VIETNAM EXPORT-IMPORT TO JAPAN FROM
1988 TO 2010:
As is shown in table 3.3, exporting to Japan reached the impressive
number from 1991 to 1996 when it constituted a large proportion in export of
Vietnam in general, accounting for the highest 34.6% in 1991 and at least 21.31% in
1996. However, the proportion of Vietnamese export to Japan in total export of
Vietnam in general has slightly reduced.
From 1997 to 2010, the reduced rate of contribution in average is 0.75 per
year despite there were negligible increase in years 2000 and 2008, decreasing from
18.24% in 1997 to 10.79% in 2010. The contribution proportion of trade between
Vietnam and Japan to the trade of Vietnam in general is also at the same reduced rate
with export situation in spite of the import and export indexes of Vietnam and Japan
increased year by year. That means Vietnam not only developed the connection to
Japanese market but also integrated to the global trade.
22
(Source: Bureau of Statistics) (Unit: millions USD)

IMPORT
EXPORT
Year
Proportion
VNJP
TRADE
over
Proportion
TOTAL
TRADE
VNJP-IM
Total IM
Proportion VNJP-EX
Total EX
1988
138.8
2756.7
5.04
60.7
1038.2
5.85
5.26
1989
105.6
2565.8
4.12
261
1946
13.41
8.13
1990
169
2752.4
6.14
340.3
2404
14.16
9.88
1991
157.7
2338.1
6.74
719.3
2087.1
34.46
19.82
1992
239.4
2540.7
9.42
833.9
2580.7
32.31
20.96
1993
452.3
3924
11.53
936.9
2985.2
31.38
20.11
1994
585.7
5825.8
10.05
1179.3
4054.3
29.09
17.86
1995
915.7
8155.4
11.23
1461.0
5448.9
26.81
17.47
1996
1260.3
11143.6
11.31
1546.4
7255.9
21.31
15.25
1997
1509.3
11592.3
13.02
1675.4
9185.0
18.24
15.33
1998
1481.7
11499.6
12.88
1514.5
9360.3
16.18
14.36
1999
1618.3
11742.1
13.78
1786.2
11541.4
15.48
14.62
2000
2300.9
15636.5
14.71
2575.2
14482.7
17.78
16.19
2001
2183.1
16218.0
13.46
2509.8
15029.2
16.70
15.02
2002
2504.7
19745.6
12.68
2437.0
16706.1
14.59
13.56
2003
2982.1
25255.8
11.81
2908.6
20149.3
14.44
12.97
2004
3552.6
31968.8
11.11
3542.1
26485.0
13.37
12.14
2005
4074.1
36761.1
11.08
4340.3
32447.1
13.38
13.98
2006
4702.1
44891.1
10.47
5240.1
39826.2
13.16
11.74
2007
6188.9
62764.7
9.86
6090.0
48561.4
12.54
11.03
23
2008
8240.3
80713.8
10.21
8467.8
62685.1
13.51
11.65
2009
7468.1
69948.8
10.68
6291.8
57096.3
11.02
10.83
2010
9016.1
84000.0
10.73
7727.7
71630.0
10.79
10.76
Table 3.3: Proportion of Export-Import between Vietnam and Japan in the ExportImport turnover of Vietnam
The structure import of our country from Japan in 2010 is still favorite
traditional goods such as: machines, equipment, computers and computer accessories,
types of steel and iron, automobile and motorbike under types of CKD, SKD, CBU.
This commodity group accounted for 60% of total import values. In addition, in 2010
Vietnam has tried to reduce the goods that can be produced domestically, and
increasingly export such as garments, agricultural products, seafood, mechanical
products and small tools, crude oil, raw materials which are main advantages to Japan.
However, Vietnam has met the hard competition from China that led to
difficulty in increasing export goods. The first reason is high requirement from the
quality of the products from Japanese. On the other hand, it is the improvement of
quality, design and especially suitable price that affects Japanese tastes. Therefore, the
trade of both countries has not corresponded with the existing capabilities of both
sides. The main point emphasized here is that agricultural products such as fruit
juices, vegetables, rice, wheat etc deeply cannot enter the Japanese market.
In general, this poses for both sides is the need to have practical solutions
and more efficient if we desire to promote trade relations of both countries. It is
clearly that stronger growth into the Japanese market is the right strategy and vision,
but to transform ideas and opportunities into reality is a challenge for the Vietnamese
enterprises now and in the future.
24
3.1.1.5. THE RELATION BETWEEN THE GROWTH RATE OF THE TRADE

BETWEEN VIETNAM-JAPAN AND THE GROWTH RATE OF VIETNAM
GDP BY STATISTICS.
Figure 3.3: the growth rate of trade of Vietnam-Japan compared with the growth rate
of Vietnam GDP by statistics.
Generally, as is shown in the figure above, the increase over the previous
year of trade between Vietnam and Japan has not been really stable, there were many
years with high increasing rate however those were following year strongly went
down. Although the change in trade rapidly reduced compared to the year 1989, but
the volume of trading and export and import turnover dramatically increase over 83
times. While change in GDP compared to previous year tent to be more stable from at
least 5% to the highest 10.17% in 2009.
Especially, in year 2009, although the trade between two countries reached
the highest reduction, meeting the lowest point of -20%, it means that trade of both
countries in 2009 was not good and it had been reduced 20% over the trade in year
2008. That could be the financial crisis influence which had remarkably affected the
economy of Japan and demands from both countries. At that time most of the
Japanese had to cut off any cost to save for their life. But it is quite amazing when the
change in growth rate of Vietnam reached the highest point over the period of 20
25
years, reaching the peak of 10.17% while the strongest reduction in trade of Vietnam
and Japan in that year. It considers that the attempt of the government as well as
enterprises to keep the domestic manufactures and services was successful and got the
unexpected well-done result for Vietnamese economy.
In general, through the statistics was shown by the figure, the trade
between Vietnam and Japan has come up or down with the GDP growth rate but this
is just the first indentify that we have not yet give final conclusion. The following part
will clearly explain and analyze the trade between two countries to deeply understand
the trade pattern of both countries over 20-year period.
3.1.2. IMPORTS AND EXPORTS BETWEEN TWO COUNTRIES BY
COMMODITIES:
Throughout over 20 years, the exports of Vietnam to Japanese market have
been still frozen seafood, electrical wires and cables, garments, handicraft products
and raw material such as crude oil, iron ore and metals. However, the structure of
exports as well as the one of imports has been had remarkable improvement. It can be
proved from changing in importing many scientific technological products and
machines to manufacturing, packing and exporting back to Japanese market also as
other markets like the Europe, USA, South Africa The following analysis will
indicate changes in the structure of trade between two countries for near several years.
26
3.1.2.1. VIETNAMS COMMODITIES WITH HIGH EXPORT VALUE TO

JAPANESE MARKET:
Figure 3.4: The export proportion from Vietnam to Japan over total export turnover
of Vietnam since 1988 to 2010
From 1988 to early 20th century, traditional items that traded by two
countries such as garments, seafood, woods and wooden products, plastic products,
coffee, coal, have constituted large proportion in exports of Vietnam. Thanked to
the special feature of low labor cost as well as abundant raw materials and stable
climate, Vietnam had got trade surplus and accepted by Japanese market with good
comments of quality, sophisticated design with suitable price and competition.
Garments
The garments is found to develop stable and sustainable from constituting
11 to 15% in total exports to Japan and growing about 17% per year.
Crude oil
The crude oil that exporting to Japan has got high proportion (25% in
2008), except the one in 2009 just getting 7.2% because of predicted fluctuation in oil
situation and finance situation in the world. With the appearance of Dung Quat
refinery plant, Vietnam specially tend to export refinery oil to Japan and worlds
demands. It cannot forget to wooden products and coffee that contributed high export
values in many years.
27
It is good news when the export of crude oil has been reducing since Dung
Quat refinery plant was used to decrease the number of exporting crude oil to Japan. It
does not need to export crude oil to Japan for refining there and then imports back to
Vietnam. Costly it makes the price of domestic oil and petrol increases. The export of
crude oil reduced from 2.9 million tons with values at 2.17 billion dollars in 2008 to
340 thousand tons with values at 214 million dollars in 2010. Therefore, crude oil
would not be main exports to Japan anymore, but it would be products from light
industry, garments, seafood, vegetables and fruits, machinery and computers.
Figure 3.5: The change of some high value export goods to Japan in the period of
2007-2010
Woods and Wooden products
28
Woods commodities are always highly respected by Japanese market.

Vietnam has advantage of the tropical country with many rivers and forests so woods
are abundant and natural. In addition, wooden products are well designed, durable,
sophisticated and competitive price compared to other ones from Malaysia with lower
quality. The contribution of this item rose from about 300 million dollars in 2007 to
more than 450 million dollars in 2010. The largest corporations such as Hoang Anh
Gia Lai or Chi Lai are reliable partners and they are the bridge for the wooden
products to Japanese market.
Coffee
Coffee is also such an important field. In 2007, the amount of coffee
exported to Japan was over 46 thousand tons with values more than 76 million dollars
and in 2010 that was 53 thousand tons with more than 85 million dollars. But the year
of 2008 was the remarkable time that 59 thousand of coffee was exported to this
market, reaching 127.4 million dollars and constituting 6.04% of total coffees exports
of Vietnam. So the markets consumption of Vietnams coffee in Japan played an
important role and it should be expanded and developed because it is nearly same
taste of coffee in Asia.
(Source: Bureau of Vietnam customs)
29
Figure 3.6: Proportion of six high value exported products to Japan in 2007 and
2008.
More importantly, nowadays especially from 2007, many export products
have jumped up in exports of Vietnam such as foot-wares, machinery, equipment,
tools and accessories, computers and computer accessories have accounted for large
proportion export to Japanese market.
Foot-wares
In 2007, the number of exporting foot-wares to Japan was very small, but
in three years later, the value of exporting this item superiorly contributed with more
than 137 million dollars in 2008, 122 million dollars in 2009 and 172 million dollars
in 2010. Especially in the first two months in 2011, the export values of this item
equaled 1/3 of total foot-wares exports to Japan. It can be said that the foot-wares is
very potential to develop in Japanese market.
Computer items and its accessories
Beside that we should regard to computer items and its accessories,
machinery, equipment, tools and accessories. If as in previous years, these items had
not yet reached high export values, by the development of light industrial manufacture
as well as scientific technology, nowadays Vietnam has been more confident to export
these items, meeting the need of using high-tech products for industrial fields of the
world in general and Japan in particular. Just in 2010, the total values of computers
and computer accessories had reached 410 million dollars, increasing 7.83% over the
previous year and constituting proportion of 5.32% in total exports of Vietnam.
30
Machinery, equipment, tools and accessories

To the items of machinery, equipment, tools and accessories, many nations
such as China, Japan or USA had quitted these fields of producing small tools and
accessories and they has focused on machinery production and heavy industry. This is
such an opportunity for Vietnams enterprises as well as industrial fields to promote a
light industry and simple production. We have not had enough capacity, technology,
science and experience so it is hard to compete with large industries in the world.
However, this is also the motivation and vision for Vietnams industry, as a good
opportunity for Vietnam to learn more and more experience in manufacturing as well
as labors skills, then pushing up and developing the labor force to be well trained and
skillful in major jobs.
31
Figure 3.7: Export proportion of important commodities of Vietnam to Japanese

market in 2009 and 2010.
Seafood, electrical wires and cables are still stable and high values of turnover in
exports. In the last 3 years, the average contribution values over total export turnover
of each item above oscillated at level of 10-12% while growth rate was not stable.
Seafood
In the case of exporting seafood, in 2008 the growth rate reached 10.16%
over the year 2007, but in 2009, it reduced 8.36% over the year 2008. But it was a
different story in 2010, the growth rate has returned and reached more than 17.5%
over the year 2009 with the total export values was 894 million dollars.
Electrical wires and cables
However, the growth of exporting electrical wires and cables in 2010 has
dramatically changed with 43% compared to the year 2009, approaching over 900
million dollars. It is considered that including seafood and garments, these types of
export items always occupy the leading position in Vietnams exports, having high
and stable growth rate.
32
3.1.2.2. Important Vietnams import commodities from Japan:

(Source from Bureau of Statistics)
Figure 3.8: Import proportion over total import turnover of Vietnam

The exports from Japan to Vietnam besides traditional items also have
positive changes and bring benefits to Vietnams economy. In nowadays, petroleum
types is no longer a priority imports of Vietnam. The values of importing this item
had been reducing from 200 thousand tons in 2007 to just 62 thousand tons in 2010.
Hence with the decreasing exporting crude oil to Japan, Vietnam could produce
petroleum types by themselves to meet the domestic demands.
It is significant to mention to raw material items such as steels and irons,
fabric types, machinery and equipment, computers and high tech products imported
into Vietnam. Specifically because Vietnam is a developing country and it needs more
capitals as well as raw materials and scientific technological machineries to push up
the domestic industry, it is reasonably necessary for Vietnam to import these items.
These products always constituted large proportion in total imports from Japan. As
particular regard to machinery items, their values always account for more than
total imports from Japan, rising from 1.9 billion dollars in 2007 to much more 2.5
billion dollars in 2010.
Steel and iron materials
Steel and iron materials imported to the domestic market remarkably
increased, especially in 2008 (1 billion dollar), going up 59% compared with the year
2007 (655 billion dollars) and in 2010 (1.2 billion dollars) increasing with the
proportion of 47% over the year 2009 (839 million dollars). In the last 3 years, steels
and irons always have been high proportion which is from 10 to 13% of total imports
from Japan.
33
(Source: Bureau of Vietnam customs) (Unit: USD)
Figure 3.9: The change of Vietnams imported goods from Japan in period of 20072010
Computer and its accessories
Mentioning to the computer and its accessories which also have made up
high percentage in imports, the price of these products has become cheaper and
cheaper mainly because of fast technological development. It is consistent with the
affordability of the rising youth as well as technological developing situation in
Vietnam. That explains why more and more people can own the computer and use the
internet. According to the statistics in 2010, there was more than 60% family owing
desktop and laptop at home, much more than that number using the internet and
mainly concentrating in the big cities. In 2010, Vietnam imported from Japan over 1
billion dollars at the values of these items.
Fabric types
To the traditional trading items like fabrics for the period of 20 years, it
continuously has contributed to the total imports of Vietnam from Japan with more
than 300 million dollars in each of the last 3 years. It is such a stable and relatively
more imported item to Vietnam.
34
Figure 3.10: Proportion of Vietnams high imported goods value over the total import
turnover in 2007 and 2010.
The figure shows that the change in import from Japan has not been changed so
much for recent years. It was still traditional commodities for the last ten years.
Automotive components and accessories
35
Beside that automotive components and accessories imports significantly

increased. In 2007, it was approximately estimated 200 million dollars but to the year
2010 it nearly reached values of 400 million dollars for these items. Particularly
peaked at 55 million dollars it did for imports in the first 2 months of 2011. Thus it
shows the big importing change in these items. It is a fact that there are a dramatic
rising number of people using automotive vehicles, in addition of the development of
transportation services, cars and vehicles assembled in Vietnam become more
attractive to the general taste with the high quality.
Many large corporations such as Honda, Toyota, Mitsubishi, Isuzu or even
though Truong Hai auto had establish the domestic brand related to the mother
company and have imported more components and accessories from many countries
including Japan into Vietnam for assembling, selling domestically as well as export
competiveness.
BRIEFT CONCLUSION: Japan is a very large market with more than 130 million
people and purchasing power of this market is quite high, specially expressed by
increasing imports, reaching $501.6 billion in 2009 and $636.8 billion in 2010. And
the structure of import-export has been changing a few but importantly. Traditional
trading goods have steadily increased year by year in both quality and quantity, but
there was decrease in exporting crude oil to Japan and it was replaced by exporting
goods with highly professional characters and high-tech parts such as electric
equipment, computers and accessories, electrical wires and cables, small machinery
and tools for industry.
Moreover, since 2007 mechanical equipment and tools have been
importantly focused mainly because China and Japan had left this behind and they set
the target to strengthen the heavy industry. This is considered as an opportunity for
Vietnam to develop in this field to receive experiences in manufacturing and compete
with other light industry countries.
In the future, Vietnamese enterprises should focus on these commodities
such as processing foods, vegetables, fresh fruits, mechanical household goods,
plastic household goods, ceramics, precious stones, even though shipping building. As
a matter of fact, it is necessary to pay attention in promoting agricultural products to
export to Japan when Vietnams population mostly are the farmer and fisher but it has
not yet shown the power of the agricultural country. It should be mentioned to the
standard of personally Japanese market for the agricultural products that will suggest
in the next chapters.
For general view with high purchasing power, the Japanese nowadays do
not require all goods necessarily with long durability anymore. Hence, goods with
36
short life circle but ensured quality, beautiful designs, utilities will become Japanese
favorite options. Through the exporting situation above, we partly have found the
explanation for trade pattern between Vietnam and Japan.
Vietnam with the strong point at low labor costs then it tends to produce
small commodities in large quantities and focuses on the production only required
common knowledge and basis skill. While Japan has a power of capacity and
scientific technology, they need labor force for operation of industrial manufacture as
well as investment for expanding the business and focusing on heavy industry.
In general, the economy of both countries is less of conflict and
competitiveness, but it supports and complements to each other.
3.1.3. CURRENT ISSUES AND ADVANTAGES IN TRADE BETWEEN TWO

COUNTRIES:
The reasons that export turnover of Vietnam to Japan are still modest
because Vietnamese enterprises have not fully grasped the advantages and overcome
difficulties when entering this market.
3.1.3.1. CURRENT ISSUES:
a. Japanese features in doing business:
The Japanese companies highly appreciate the prestige in doing business
with other partners. They respect to their partners and strictly implement any
agreements signed in the contract.
Moreover, those enterprises have careful process to find potential partners
before doing business with them in long term, even though sometimes orders are not
large volumes.
Japanese have high requirement in standard, durability, reliability,
usability of the product and they are willing to pay much higher for those good
products. This requirement even includes warranty and guaranty services such as the
timely distribution of manufacturer when a products malfunction, ability and time to
repair that product. Minor scratches, cuts only remaining on textile products, packing
buckets deviation, etc small errors by inadvertently during transport, or the stage of
finishing products may lead to hard-sell shipment, impact on long term production
plan.
b. Important priority requirements and barriers from Japanese market to
Vietnamese enterprises:
37
Quality, cost and delivery requirement

Japanese market have high requirement in the quality of the product,
therefore it is necessary for domestic companies to invest in promotion in many fields
such as design, technique, preservation, transportation, quality management. The
Japanese appreciate the quality factor, price and delivery on time (QCD Quality,
cost and delivery). Thus all goods exported to Japan should be approximately at the
same quality. With that, the price of the product is also important because the
Japanese always expect goods which tend to reduce the price. And then the
requirement to manufacturers is correctly meet the need of the market as well as offer
the product with reliable price.
Food hygiene and safety requirements
Since May 29th 2006, Japan has implemented Law on Food Hygiene and
Safety amendments to all imported food shipment in Japan, tightens regulations and
the number of additional residues are not allowed in the food and continue to raise the
limit of chemical residues. The Japanese are highly aware of protecting the
environment. The business goods should mainly compliance the eco factor. Today,
the quality and safety of many goods are not guaranteed because of using too much
dangerous chemicals or toxics. Japan considers the situation to stop importing
unguaranteed products. Hence, it is difficult to any enterprise which wants to get into
this market without ensuring the good quality. All the commodities to Japan have to
pass these five required factors from the Japanese standards: clean, refinery,
unnecessary parts cut, pure environment and orderliness.
For example, Shrimp and Squid exports of Vietnam have been checked for
quality control and food safety 100%. This affected the prestige of the field of
processing and exporting seafood of Vietnam, increasing the cost and decreasing
competition ability of goods. The reason was that in about 200 companies exporting
seafood to Japan included 30 companies violated the Japanese law and regulation in
2007.
Market and culture understanding
Many small and average Vietnamese enterprises have not enough
information about Japanese market and experiences to do business with Japanese. The
difficult is that the conducts of survey and market access in Japan quite expensive for
these small and average companies, even though it brings problems to large
companies to compete with domestic enterprises because of the high cost that may
lead to the high price of products. More importantly, Vietnamese companies have not
been understood thorough the culture and business practices of Japan. This is quite
38
important if Vietnamese companies want to sell their products without understanding

what markets needs and how markets operation.
Technology requirement in manufacturing the product
Some more specifically, technological and technical barriers to agricultural
products and seafood are quite serious problems in exports such as Food hygiene and
safety. To vegetables, Plant protection Law of Japan has fallen Vietnam to its list of
the fruit-fly epidemics, hence Vietnam has not been allowed to export some fresh
fruits like dragon fruit, mango, papaya, cucumber, tomato to Japan. This is not
good news for the farmers when Vietnam is good at planting these fruits, the abundant
production fully supplies to domestic market and exports.
Difference in product quality standards
Other problem is what technical standards and product quality should be.
The Japanese industrial standards (JIS) and Japanese agricultural standards (JAS) are
different from the international standard organization (ISO), while most of
Vietnamese enterprises follow the ISO.
For example, JIS specifies the height of the spark plug from the gasket or
tapered seat of the sparkplug to the top of the terminal nut (or thread terminal) as
53mm. The ISO standard for sparkplug height is 2.5mm shorter than the JIS standard
at 50.5mm. While the small difference in height will not affect most vehicles (ISO
and JIS types can often be interchanged), some vehicles (particularly with the direct
fine ignition or specially fitted plug caps) must use the correct plug standard or a bad
contact between plug and cap may be result. Common ISO type plugs are NGK, BKR,
Denso K or IK and Champion C or RC. Common JIS types are NGK BCP, Denso Q
or IQ. ..
The JAS are the basic for Japanese consumers to choose processed foods.
The list of foods adjusted by JAS including: beverages, processed foods, cooking oil,
cooking fat, processed agro-forestry products.
Strict distribution system and high cost in touching markets needs
More difficulties for Vietnamese enterprises are the cost management and
distribution system in Japan. The products imported into Japan through many various
test and distribution channels before coming to the final customer. So it leads to the
situation of high prices compared with import prices.
Moreover, Japan is one of the most expensive countries in the world,
hence it takes high cost to conduct marketing research for Vietnamese small and
average enterprises to touch the market needs. It is the fact that Japanese lifestyle is so
expensive then costly to the small and average Vietnamese companies.
c. Intrinsic difficulties on Vietnam site:
39
Lack of information about Japanese market

Notable present many Vietnamese enterprises still do not know much
about the business practices of Japanese enterprises, they are lack of information
about Japanese market as long as importers, distributors in Japan.
In addition, to do market research for Japan, case by case depending on
business depth, difficulty to obtain the data, the cost is still quite high because most of
Vietnamese enterprises are small and average ones so they do not have enough funds
to do this. It means that if one Vietnamese company could be successful in doing
market research in Japan, they also faced the increase in their product price that led to
the less competition with other products from other countries such as China or
Malaysia. From this reason, most of companies from Vietnam have to do business by
the prediction in Japanese demands, export goods based on subjective conception or
mainly instinct. Many of them failed. But it is good example for other companies
and even though themselves to learn knowledge, get experience and be mature in this
market section.
Passive mind in doing business
According to opinions from Japanese companies reflected that Vietnamese
enterprises were lack of objective spirit in doing business with Japanese partners.
They hope Vietnamese companies need to have practical and specific strategy, rasie
the sense of initiative so on it will be supported and incorporated at the Japanese site.
Low performance in doing business
All the Japanese companies highly respect the prestige in business, but
many Vietnamese companies still cannot perform well. Lots of contracts signed
between both sides but slowly delivered goods were or wrong design, incorrect
quality to the Japanese partner.
Lack of business communication to Japanese partners
Working and transacting manners of Japanese enterprises are quite formal,
ritual, mutual respect. While working to each other, Japanese require the partner to be
formal and strict to every gesture, action, dressing, ritual greeting
In the Japanese cultural communication, there are 4 main things that
Vietnamese enterprises should respect them, those are ritual greeting, being on time,
overtime working and especially business cards. It will be difficult for partners to do
business if one of 4 factors is forgotten for any reason, especially forgetting the
business card. The Japanese would think that their partners did not highly respect
them or they find difficulty to put the trust in the partner without clear information or
40
misunderstanding gestures. The leader of small and average enterprises in Vietnam

are still lack of this because of long time habits in business.
Generally, Vietnamese are not really strict in business, they found it easy
to ignore the small error in product or skip attitudes from the trader then different with
Japanese about quality standard as well as working manner. This should be changed
because Vietnam has joined the global economic play-ground, hence it needs more
changes in leaders vision, business practices, world knowledge understood and
formal gesture, particularly respecting their own rules in doing business with the
Japanese. They tend to learn and check information about the partner they are going to
do business. So the company of Vietnam should be certainly clear and reliable.
For example, the Japanese partner will be worried if they take a call to the
Vietnamese company but there is nobody to receive the call, they will wonder that
they should put themselves in belief in this business then reduce the trust in that
Vietnamese company.
3.1.3.2. TRADE BENEFITS TO VIETNAM:
As is shown above, the international trade between Vietnam and Japan are
steadily developing. In 2008, the total import-export turnover of both countries
reached 16 billion dollars and 13 billion dollars in the difficult time of 2009, while
approaching the peak of 16,7 billion dollars in 2010 (nearly 23% over 2009). In this
relation, it relatively considers at trade balance between two countries. Vietnam
exports to Japan with main commodities such as farming seafood, garments, shoes,
wooden products, accessories and machines and imports from Japan equipments,
technology and capitals Japan also receives a remarkable number of Vietnamese
labors.
Some agreements bring benefits to Vietnams exports
The GSP preference from Japan for some commodities of developing and
less developed countries including Vietnam when exporting to this country had been
approved. Vietnam signed the Agreement on Comprehensive Economic Partnership
among Japan and Member States of the Association of Southeast Asian Nations
(AJCEP) on 1st April 2008 and this agreement would be effect at late 2008. In AJCEP
framework, Vietnam committed to remove tariff for 82% bilingual trade between
Vietnam and Japan in 16 years. Vietnam defaults to get benefits from Japanese
conferences generally committed to ASEAN. According to the AJCEP agreement,
Japan has eliminated tariff with approximately 94% of total commercial values of
Vietnam Japan in 10 years.
41
Vietnam officially became a member of WTO, committing to cut the

import tariff from the current average 17.4% to 13.4% in the 5-7 year period, this is
the opportunity for Vietnamese enterprises to make useful of these conferences to
import materials and technologies from Japan to produce products with increasing
values, high technology content to serve the domestic consumption and export.
Since the Comprehensive Partnership Agreement had been signed, there
were more than 1/3 Vietnamese goods to Japan which get benefits from the
agreement, especially taxation area. There are still 95% industrial products from
Vietnam to Japan that they will have the reduction in the tax rate to 0% (reducing on
roadmap). Many commodities such as shoes, wooden products, chemical products,
farming goods will be also decreased in tax rate. With the power of the economy of
both countries, the goods from two different economies are implementing and
supporting to each other because of different level and grade goods.
Chance for labors to work in the healthcare system in Japan
According to ministry of industry and trade, ministers of both countries
negotiate to receive about 400,000 Vietnamese labors working in health system field.
This is the chance for Vietnamese labors to develop their skills in this service market
and solves the problem of unemployment happening in Vietnam then supply the labor
force for Japanese market. Therefore, Vietnamese people or labors should express
their capabilities as well as shows the honesty and diligence in work so that the
Japanese enterprises may put more trust in Vietnamese workers then they potentially
put high appreciation in supply of labors from Vietnam. This will become an
advantage for Vietnam when we are trust by the reliable market then we may compete
with other labor force supply countries.
New chance for mechanical products in light industry and information technology
industry
Japan has high demand on importing low level of technology mechanical
products. In the past, 50% of these kind of mechanical products were imported from
China, but nowadays China does not want to corporate with Japan in this field, in
addition the operation cost increases and especially does not China belong to one
market target. So Japan needs to import from other countries such as Vietnam with
frame buildings, the types of trolleys, conveyor It considers a niche market for
Vietnamese enterprises to get into because the goods do not require high technology
and the cost is quite competitive in Vietnam.
42
Beside that Japan used to import software from India or China, but today
Vietnam is more concentrated because of the low labor cost and un-high investment
cost.
High demand for processing foods and agricultural products by Japanese
households
The trend in importing farming and agricultural products has been
changed, Japan used to import these kinds of goods from China, but with the pressure
in price increase, they turn to corporate with Vietnamese farming suppliers. In recent
time, Japan has reinvested the fruit-fly epidemics treatment machinery on the dragon
fruit and allows enterprises to import this fruit from Vietnam.
Today the Japanese youth have been westernized more and more, the
women in this country tend to increasingly work to help their families, so the demand
of using fast food and processed food is increased. This is also a potential market for
Vietnamese food processing enterprises to strongly join in.
Japans production orientation to the Southeast Asia
One more advantage for Vietnamese companies to enter the Japanese
market is that the Japan is changing the commercial and economic policy. The Japan
vision is no longer to focus on domestic production and domestic market but widen to
connect to the global production and consumption. In that, the increase in import and
export goods orientates to the South-East Asia, hence there are many bilingual
agreements with each country in ASEAN (7 agreements, including Vietnam) and one
general agreement with whole ASEAN staff, simultaneously for GSP preferential
tariff treatment for some countries.
According to Mr Vo Thanh Ha, deputy head of North East Asia The
Asian market Pacific, after the global financial crisis, the Japanese economy has
strongly been affected then it changes consumption habits of Japanese civilians.
Therefore the market of cheap goods becomes popular and they appear more and
more in the supermarket system as well as distribution system.
3.2. MAIN FINDING OF THE THESIS: THE IMPACT OF INTERNATIONAL

TRADE BETWEEN VIETNAM AND JAPAN ON THE VIETNAMS
ECONOMIC GROWTH RATE:
From the theory of AD-AS model, the economic growth rate is defined by
variable factors: international trade between Vietnam and Japan (VNJP), international
trade among Vietnam and other countries (VNOT), consumer spending (C),
43
government expenditure (G), foreign direct investment (F), investment (I) and
domestic productivity (GDP over employees) (P) are expressed through equation:
GDP = a + b0 Consumption + b1 Investment + b2 Government
Expenditure + b3 FDI + b4 Productivity + b5 Trade VN-JP + b6
Trade VN Others + c
To test the point that this thesis tends to do, the regression should be used.
Regression Equation:
A statistical technique used to explain or predict the behavior of a
dependent variable. Generally, a regression equation takes the form of Y= a + bx + c,
where Y is the dependent variable that the equation tries to predict, X is the
independent variable that is being used to predict Y, a is the Y-intercept of the line,
and c is a value called the regression residual. The values of a and b are selected so
that the square of the regression residuals is minimized.
To give more exactly in calculation, the equation should be in logarithm.
log(GDP) = a + b0 log(VNJP) + b1 log(VNOT) + b2 log(I) + b3(GX)
log(FDI) + b4 log+ b5 log(P) + b6 log(C) + c
Where GDP = Gross domestic product
C = Consumption.
I = Investment.
GX = Government Expenditure.
FDI = Foreign direct investment.
P = Productivity per employment.
VNJP = Trade between Japan and Vietnam.
VNOT = Trade among Vietnam and other countries.
The
data
collected
from
1988
to
2009
44
by the
Bureau
of
Statistics.
3.2.1. RUNNING REGRESSION EQUATION:

Thanks to the development of scientific technology, easily is the regression
equation calculated by the software such as E-view or SPSS. The software was used
in this thesis is E-view version 5. After running regression equation, the result was
found below:
log(GDP) = a + b0 log(VNJP) + b1 log(VNOT) + b2 log(I) + b3
log(GX) + b4 log(FDI) + b5 log(P) + b6 log(C)
The equation is:

GDP = 9.081031 0.162779 (VNJP) + 0.054792 (VNOT) 0.003099 (I)
+ 0.037509 (GX) + 0.020008 (FDI) + 1.325951 (P) + 0.0084794 (C)
Unluckily, it was found unexpected result. All variables led to the case of
negative index which means that independent variables reverse function, the growth
rate of GDP is the result of the decrease of international trade between two countries,
that sounds unreliable; Or most of variables except trade of both countries and
productivity have no meaning under the T-test in spite of passing F-test and Rsquared. More particularly, with the number of degrees of freedom is n-k-1, we have
22-7-1 or 14 degrees of freedom. Turning to the T-table shown below, we see that the
critical t-value at the .05 level of significance or 1.761 using a one-tail test and 2.145
using two-tail test. As the result shown, it is easy to see that most of variables could
45
not meet the requirement compared to the critical T-value or they get smaller value
than critical T-value.
This seems to be suffered from the multi-collinearity. The multicollinearity explains the relationship among different variables, one or more
independent variable are factors that may affect the other variables but not directly to
the function, hence the function will not meet the optimist result. Therefore, whether
it can pass the Durbin Watson test, it is still invalid.
3.2.2. TESTING THE COMBINATION OF VARIABLES AND REJECTION:
- To find the equation to prove the international trade of both countries into
the economics growth rate, the regression equation was run with each variable, one
by one variable would be step by step increased and rationally replaced position in the
function (this action will be done for all tests below). However it cannot be found the
positive result (Appendix A)
With the hypothesis of the wide gap between points and the line, variable
AR(1) was put into the equation. Almost the result received is negative but I got two
optimistic ones that will discuss in the next part. (Appendix B)
- For more evidence, the work was continued with the delta equation under
regression equation, it would be explained under the performance of economics
growth rate year by year.
d(GDP) = a + b0 d(VNJP) + b1 d(VNOT) + b2 d(I) + b3 d(GX) + b4
d(FDI) + b5 d(P) + b6 d(C)
First the equation was run without variable AR(1) but we cannot find the
right answer because all of the result cannot pass the T-test with lower index than the
critical T-value at .05 level of significance or 1.734 using one-tail test. (Appendix C)
With the hypothesis of the wide gap between points and the line, variable
AR(1) was put into the equation. But the result is still negative and they cannot pass
the first priority requirement from T-test. (Appendix D)
- I also separated the variable VNJP as well as VNOT into Import and
Export variables to check, hence the equation for running regression now is:
log(GDP) = a + b0 log(VNJP- Import) + b1 log(VNJP- Export) + b2
log(VNOT- Import) + b3 log(VNOT- Export) + b4 log(I) + b5(GX)
log(FDI) + b6 log+ b7 log(P) + b8 log(C) + c
After running regression equations, the normal result as well as result with
AR(1) variable are negative, which means that there are no proves for trade of two
countries impacts on the economic growth rate.
3.2.3. RESULT: RUNNING REGRESSION EQUATION WITH
VARIABLES
46
TWO
When testing the combination of variables, we get two possible normal

equations (including variable AR(1)) with two variables in each, first with variables
VNJP and Investment (I) or (IV), the second with variables VNJP and Government
expenditure (GX). Now we look for more checked:
The result:
The equation of two variables VNJP (trade of Vietnam and Japan) and IV
(Investment)
47
The equation of two variables VNJP and GX (Government expenditure)
The T-test: With n=21, k=2 so the degree of freedom equal n-k-1 or 18,
both equations have T-test statistic over the critical T-value at .05 level of significance
or 1.734 using one-tail test.
The R-squared value which equals 0.988021 and 0.989965 respectively
passes the requirement of at least 80%.
The F-test: F-value of both equations is at high values: 467.3972 and
559.0212 in that order.
The Durbin Watson test: test statistic d equals 1.744746 and 1.912174
respectively.
+ To test for positive autocorrelation at significance , the test
statistic d is compared to lower and upper critical values (dL, and dU,):
We have n=21, k=2 so the dl=1.13 and du=1.54
d > du there is statistical evidence that the error terms are not positively
autocorrelated.
48
+ To test for negative autocorrelation at significance , the test

statistic d is compared to lower and upper critical values (dL, and dU,):
We have n=21, k=2 so the dl=1.13 and du=1.54.
d > 4-du there is statistical evidence that the error terms are not
negatively autocorrelated.
The White Heteroskedasticity test: with the hypothesis that there is no
phenomena change in the variance of error. Under the test by Eview 5 program, we
got equation results:
(Investment) (1)
49
And the equation of two variables VNJP and GX (Government expenditure) (2)
In this test, we have to check the Obs*R-squared and compare it to the Chi-squared
critical value to find the result of the hypothesis. In two equations above:
-
Equation (1) Obs*R-squared = 7.494343

Equation (2) Obs*R-squared = 6.671818
Number of degree of freedom equal number of independent Zvariables = 4
So we have
Chi-squared critical value (df= 4, 95%) = 9.49 > eq.(1) Obs*R-squared
= 7.494343
And
Chi-squared critical value (df= 4, 95%) = 9.49 > eq.(2) Obs*R-squared
= 6.671818
As the result is shown above, the hypothesis is accepted and there is no phenomena
change in the variable of error.
50
Observing the values of Mean, Median, Kutoris, Jarque-Bera: observing the

below results, both equation have passed this test.
(Investment)
And the equation of two variables VNJP and GX (Government expenditure)
51
Two results above have passed all tests we need, the conclusion therefore
can be said that both equations can present to prove and demonstrate the growth rate
of economics through increase in GDP. The equation is:
GDP = 8.408126+ 0.318864 (VNJP) + 0.123354 (I) + 0.643613 AR(1)
Or
GDP = 8.1369 + 0.29641 (VNJP) + 0.164015 (GX) + 0.595694 AR(1)
Over regression equations run above, the results are unexpected, but quite
a fair objective. It still has evidences that indicate the contribution of international
trade between Vietnam and Japan to the economics growth by two equation found
above.
In conclusion, the formal equation did not bring exactly views about the
real situation of economics but by the results of the random error. Final equations
found illustrate and demonstrate how much as well as how far the trade between
Vietnam and Japan can contribute to the Vietnams economics in spite of the
influence from the multi-collinearity and error. With the government expenditures
increase that leads to economics growth, effectively and reliably should the
government spend more money to the education, health, transportation, infrastructure,
especially agricultural and industrial fields then support to the international trade
between two countries in particular.
52
CHAPTER IV
CONCLUSION AND RECOMMENDATION
4.1. CONCLUSION
The thesis has met the objectives that mentioned in the earliest chapter.
Firstly, the thesis has summarized all the theoretical points of international trade
theories and growth theories (on chapter 2). Mainly, those are the Comparative
advantage model and Heckscher-Ohlin model which explains the trade pattern
between Vietnam and Japan, Keynes model which describes how economic growth
happens and what elements impact on that growth.
Secondly, the thesis has also reviewed and analyzed the current situation
of international trade between Vietnam and Japan in the period 1988-2010 (Chapter
3). Based on the data collected by Bureau of Statistics generalized changes in kind of
import-export goods over the 20-year period and showed the near future trend of
trading goods between two countries.
Thirdly, the thesis constructed an econometric model measuring impact of
international trade between Vietnam and Japan on economic growth of the country by
using the Regression equation (Chapter 3). It proves the contribution of trade between
two countries through 2 found equations after tests. Those are: (1) equation with
variables Trade between Vietnam-Japan (VNJP) and the Investment (I or IV); and (2)
equation with variables Trade between Vietnam-Japan (VNJP) and the Government
expenditure (GX).
The equations are:
GDP = 8.408126+ 0.318864 (VNJP) + 0.123354 (I) + 0.643613 AR(1)
and
GDP = 8.1369 + 0.29641 (VNJP) + 0.164015 (GX) + 0.595694 AR(1)
Through the result found in the chapter 3, it proves that the international
trade between Vietnam and Japan has contributed to the economic growth in Vietnam.
The next part will give the suggestion to develop trade of both countries to increase
the economic growth.
53
4.2. RECOMMENDATION:
Through the analysis above we can see that the international between
Vietnam and Japan has contributed to the increase of economic growth. With the
factor trade between Vietnam and Japan, the factor Investment as well as Government
expenditure also impacts on the economic growth. Therefore to increase GDP or
economic growth rate, besides developing the international trade between two
countries, it should be improved in some fields.
4.2.1. THE INVESTMENT IN THE COUNTRY
Infrastructure development to increase the foreign investment
For the investment in the country, the development of industrial machines
is quite necessary because it can modernize the domestic manufacture and reduce the
time as well as promote the product quality to be much more exactly and
sophisticated. This process of development needs support from the government to
issue policies to reduce the taxation to help the enterprise can cut cost then encourage
them to import machines.
Besides, the infrastructure of some main cities and provinces which are
mainly concentrated in the industry, service and tourist fields. The local officer of
these areas should find prestige companies to build up the road system on time and
avoid the delay by the strict penalty. It is necessary to develop the infrastructure
system because it will attract foreign investors.
+ First, the foreign investors as well as foreign construction companies
participate in bidding for work in Vietnam. It is quite good because the competition
will happen among domestic companies and foreign companies then the construction
quality would be improved. By dividing each areas for each company which is
prestige and strong, it can be observed their work capacity through work process and
time limit, work quality after completion.
+ Second, foreign manufacture and service companies will invest their
work in Vietnam when they see the development of Vietnam in infrastructure and
transportation which is improved and convenient. By their investment, gradually they
bring technology and production method into Vietnam then through it, an attempt to
bring Vietnam to become industrial country. Parallel with that is to carefully solve the
supply drainage and wastewater treatment system, avoiding polluting into the rivers,
sea areas and living land and natural regions that affects to the health and daily live of
civilians and other creatures.
Information technology system in State to promote the Government administration
system
One more important thing is that to build up the government
administration system by information technology system which is stable, safe and
54
effective. Although information technology project 112 has partly not yet succeeded
and met many difficulties, but developing information system in government work is
quite significant. This will promote the management quality, improve administrative
procedures as well as reduce the time and opportunity cost of enterprises and
civilians. This reform will push up the confidence of enterprises to join into business,
decrease maximum costs which are unnecessarily springed then reduce the product
price to closely approach the customers purchase.
In addition, good administrative system will attract more foreign
investment into our countries because the foreign investors feel safe and comfortable
in the business environment of Vietnam.
Promoting school facilities to improve teaching quality
The government should develop the educational facilities, improve the
media education, set up multi-function rooms, install computer rooms with projectors
for teaching by electronic textbooks The government should make conditions for
local social organizations to do small projects to build and increase the chance in
study for children and youth in difficult circumstances. The development of education
to ethnic groups to improve schools facilities in villages and areas that may help
them to reach the basis knowledge then approach higher level of college and
university to keep stable material life, spirit to learn, maintain and keep improving the
quality of compulsory education. It contributes training resources agents for these
areas, ensuring equity in education. Thereby, it makes conditions to push up basis
knowledge for local agency staff, workers to join their careers in local industrial
manufacture, agricultural work and service. Deeply developing new economic areas,
avoiding to focus on so much in big cities which will make the big gap in economy
and education among areas whole the country.
Learning education methods from developed countries
Besides, learning the education method from developed countries is
important to have wide and long vision in the future. We should gradually apply and
change the method depending on each particular educational situation of the country
to supply the new young staff of knowledge based on the real condition and situation
of social development.
More importantly, the health care system must be improved. The facility,
ability of the staff and healthcare quality in Vietnam need to be more and more
developed through building health infrastructure and technological facilities.
Investment in building infrastructure and equipment for the hospital to meet the
growing needs and
diversity of people, reduce overcrowding front, improving
people's health quality. Developing the healthcare field will avoid the diseases spread
out, then it makes motivation for people to contribute the youth and do business.
55
Investment in healthcare system to protect civilians from disease and stabilizing

daily life to serve the wealthy of the country and attract foreign direct investments
Importantly when the healthcare sector becomes key industry, same like
other industries it will attract the investment from foreigners to create the competition
among healthcare service supply companies thereby they will bring better caring
services to the civilians or customers. To public hospitals, the government should
focus more on improvement because they will meet the competition from other
private ones. The table below shows the capital of the government for health sector in
several years from 2006 to 2010.
Table 4.1: Capital investment and development focus for 2006-2010 is VND 7,132
billion:
(Unit: VND million)
Year
Total
2006
2007
1,191,200 1,513,200
II
2009
2010
1,390,000
1,462,000
1,576,000
Domestic
685,000
890,000
763,000
896,000
980,000
Foreign
506,200
623,200
623,200
560,000
590,000
3,800
6,000
6,000
Prepare to invest
I
2008
Ministry of Health
760,200
932,200
811,200
856,000
1,054,000
Domestic
410,000
528,000
510,000
521,000
614,000
Foreign
350,200
404,200
301,200
335,000
440,000
Others
431,000
581,000
575,000
600,000
516,000
Domestic
275,000
362,000
253,000
375,000
366,000
Foreign
156,000
219,000
322,000
225,000
150,000
(Source from Ministry of health)
The health service always is attached special importance, accounting for

proportion from to 2/3 of total investment capitals of the government into the
investment and development focus. Compared with previous years, the investment in
health system in 2010 made up the highest proportion of governments investment,
thereby it is shown the attention from the government to this field, depositing in
modern machines, medical equipment and improving the living standard of the whole
health staff as well as the service quality to the patient in recent years. Health bonds
also significantly increase. More particularly, total government bonds which have
been issued reach 9,150 billion VND, including 3,750 billion VND in 2008, 3,000
billion VND in 2009 and 2,400 billion VND in 2010; approaching 65.4% against
56
plan. The remaining is 4,850 billion VND, and the plan for 2011 is to distribute about
1,500 billion VND.
4.2.2. THE GOVERNMENT EXPENDITURE:
Stop impossible projects to socio-economic efficiency, inadequate capital and less
urgent needs
For the government expenditure, the main problem is the increase of the
inflation rate. Therefore the government should estimate, classify remaining projects
and in that the important effective socio-economic criteria is the only measure way to
confidently stop impossible projects to socio-economic efficiency, inadequate capital
and less urgent needs. Other projects can be changed the classification of the
investment structure of 100% the governments budget to the form of BT, BOT,
BO
Especially the government expenditure for festivals, important days and
anniversaries should be completely and carefully controlled to approach the target
project. And it should be rejected constructions, activities which bring flaunt and
formalism.
Reforming the administrative procedures to make ease for business and attract the
FDI
Other aspect from the role of the government is to help the enterprise to
cut off the cost of production through administrative procedures reforms. According
to the data statistic collected by Mr Nguyen Xuan Phuc, the Ministry Chairman of
Government Office, shows that if 256 administrative procedures in about total 5,000
ones were cut-off, the government would save about 6,000 billion VND.
Avoiding monopoly from government in industry of electricity, gas, coal to
increase competition
On the other side, with the State monopoly or exclusive advantages of
scale, some manufacturing industries such as electricity, gas, coal should be
controlled production costs and profit margin to keep the average level, not happens
to monopoly situation that leads to the exclusive benefit.
Transparency in auditing in enterprises and state corporations
In addition, the audit of the State Auditor has only touched the legitimacy
and reasonableness of the expenses of enterprises, state corporations, not yet analyzed
the reasonableness of the financial and technical views of the clause costs in price.
This issue should be clarified in the future because of the fact that gasoline prices are
increasing despite fluctuations in the world prices is two-dimensional fluctuations.
Transparency in pricing oil
57
Moreover, we have the Dung Quat oil refinery, which is 100% dependent
external price is difficult to understand. Many hydropower plants, electricity and gas
used by the Government and the gas composition and economic investors are frantic.
But the discussion about the price of buying electricity of the Electricity of Vietnam
(EVN) to investors outside the power sector has always been tensioned in the
direction of the rising of electricity prices but not seeing the signal of the reduced
prices thanks to the advantages of scale.
In general, there is relation between the Government expenditure and the
inflation, that impact on the GDP growth rate. If the budget deficit from the
government is high, it leads to the increase of the inflation. Especially if the budget
deficit is fixed by issuing more currency into the market, it may lead to the inflation
also.
More importantly, when the Government expenditure increases to
stimulate the consumption and demand, it also stimulates the development investment
then by the increase of the development investment, it will lead to the high increase of
the GDP growth rate. However, if increased expenditures exceed the permitted level,
reaching the budget deficit as too high and to offset this deficit that must borrow huge
debt burden, it will lead to debt. The result is taken to stimulate consumption
(excessive stimulus) in the following cycle that will lead to the inflation, but the
inflation reduces the development investment then leads to reduction of economic
growth rate. Therefore here is the actual amount required by State budget spending
levels at the permitting level to push up the development investment and the next is to
climb the economic growth that does not lead to higher inflation.
4.2.3. INTERNATIONAL TRADE BETWEEN VIETNAM AND JAPAN

With the current state of trade, the issues raised for Vietnam is to solve the
existing problem and overcome obstacles to push up the trade relation between
Vietnam and Japan to commensurately develop with the potential economy of both
countries. To take action, Vietnam should give following practical solutions:
4.2.3.1. EXPORT
Issuing constructive policies to encourage Japanese enterprises invest technology
and produce goods for export in Vietnam
At the macroeconomic view, the government should give constructive
policies, encouraging the corporation of Japanese enterprises in the production of
export goods in Vietnam. It means that Vietnam needs to attract more capitals and
investment from Japan in the domestic industry and manufacture. In that, bounding
the export of raw materials and unprocessed foods to Japan is necessary and it has
been good trend when Vietnam has reduced these commodities in recent years such as
crude oil, steels and irons in raw (as is shown in chapter 3).
58
Developing processing industry to highly export

In addition, it should be positive policies to give attraction to Japanese
investors to join in processing industry, especially seafood field. It is quite important
and potential chance because with the Japanese owners or investors they will bring
capitals, technology to promote the processing industry as well as improve the quality
of goods and replicate business format from Japan to Vietnam while production of
seafood in Vietnam is abundant and diverse. From this, seafood commodity will
closely enter the Japanese market with the Japanese quality requirement. Other thing
is to establish and improve, widen reputed trade promotion offices, parallel to
organize propaganda ad activities, conferences to extend domestic products and
import commodities.
Master plans in manufacturing export goods
At the microeconomic view, it should be master plan, professionally to
manufacture export goods, choosing main commodities step by step and toward
important and potential brand-name.
The product quality should gradually be promoted, preventing the
psychology that ignore the quality of export commodity from Vietnam popularly
exists in Japanese spirit to keep the business with the partner. In that, importantly
maintaining credibility with consumers is the key point of export programs.
Creating and learning kinds of advertising, packing and preserving goods
from developed countries, choosing packaging options, packing form depends on the
taste of consumers.
Overall, a satisfactory way to solve the benefit of export departments, the
most importance is price. It also necessary to change the structure of export from
exporting raw materials or unprocessed foods to processed goods to exploit the power
and competitive advantage of the country.
Suggestion for exports to the current situation in the Japan after disaster in
March 2011
To the current happening in the Japan, double disaster earthquake and
tsunami devastated the Northeast Japan. It made people believe that the Japanese will
tighten their belts for reconstruction, so the export to this market will be difficult.
However, the fact nearly two months proves a contrary. Japan is in the process
overcoming the consequences of the disaster and rebuilding the country step by step
therefore the demand for consumer goods as well as materials and equipment have
increased rapidly. Not only increased in volume, because of the urgent need for life
and the reconstruction of the country, many Japanese companies are willing to accept
the unit price increased 10% to the found soon and in time to meet the domestic
demand. The increase exports to Japanese market as not only practical supports to
59
Japans reconstruction and stability to peoples lives but also an opportunity to

increase export turnover of Vietnamese enterprises.
(Source from the Bureau of Statistics) (Unit: USD)
Figure 4.1: Total export turnover of Vietnam to Japan in the first four months in 2010
and 2011.
Firstly, about consumer goods, because the earthquake had strongly
destroyed nuclear reactors at the Fukushima nuclear power plant so the risk of
radioactive contamination in food, vegetables, ground water, and large sea creatures is
quite great. Therefore the demand for vegetables, seafood consumption in Japan
increased sharply because they feared contaminated and do not dare to use food,
seafood, fruits and vegetables domestically.
Every year, Japan imported about 3.5 million tons of seafood and Vietnam
exported about $900 million to Japan and this is the 2nd market for seafood field in
Vietnam. Seafood is very popular to the Japanese hence to meet todays consumer,
import companies continuously requires Vietnamese partners to bring goods on time,
even though earlier than deadline.
On the other hand, Japanese partners also proposal to sign other contracts
to supply new offers even though the old contract is not fulfilled. Beside that various
kinds of rice vermicelli and rice, textiles, foot-wares, furniture are also in great
demand from Japan. At Cat Lai port, everyday value exported to Japan reached an
average value of $1 million. At Phuoc Long, Tan Cang ports, exported goods also
more and more increase. Japans housing was built of wood and uses a lot of
wood furniture, hence promoting the import of timber and furniture will be
definitely happened. This is a good opportunity for Vietnams wood business.
Through statistics about the first four months exports in 2011 from the Customs
Department, the export growth rate of marine products, agricultural products and
60
wood products has increased significantly over the same period last year , namely:
seafood 6%, fruits and vegetables 20.67%, pepper 59%, cashews 50%, rubber 94%,
steel products 30.94%, machinery and equipment 23%... This proves that the demand
from Japan does not decrease but grows well at recent time.
About materials and equipment, earthquake and tsunami devastated the
Northeast Japan, which is house of many automotive, electronic manufacturing
facilities of Japan. To restore production, the demand for raw materials and equipment
are huge, especially raw materials for production of spare parts to serve the needs of
automobile assembly, machinery in the world. So when Japanese move into
reconstruction phase, the demand of these above commodities is very large.
Vietnamese enterprises should grasp and take advantage of this opportunity to
increase export turnover. In which, items of machinery and equipment, electric cables
and wires can be highly increased the turnover.
4.2.3.2. IMPORT:
Timely and continuously importing the category and number of goods: it is quite
important to estimate goods that the country needs importing to make export plan and
find the partner as well as the customer to avoid capital waste.
Restraining the import of consuming goods especially luxury goods such as luxury
cars, cigarettes, precious metals Imports based on reasonable protection of domestic
production.
Necessary attempts to limit and eliminate the smuggling of consuming goods:
Importantly that comes from the governments attempts to limit and eliminate the
smuggling of consuming goods. It is necessary for the government to highly increase
solutions to promote the effect, performance of management agencies in import and
export goods. But at first, the law system should be completed and considered as a
legal basis for anti-smuggling and anti-corrupt agencies activities.
4.2.3.3. ENTERING INTO
ADVERTISING ACTIVITIES
THE
JAPANESE
MARKET
THROUGH
Almost the enterprises who organize the export of goods or services

overseas do not know how to make the foreign consumer understand and believe in
their products. In other words, the small and average enterprises do not have
experience and knowledge in the foreign market. It is explained by 3 following
reasons:
Firstly, as we know most of the Vietnamese companies are small and
average enterprises hence they do not have high financial condition to make
advertising in foreign countries because of high cost, especially Tokyo in Japan is
considered the most expensive place in the world. Therefore, this is the barrier for
Vietnamese enterprises to enter Japanese market. High costs may push the price of
61
goods increase then it makes difficulties to compete with domestic products and cheap
ones from China or Indonesia.
Secondly, small and average companies do not have experienced staffs in
exporting field to Japanese market and even though experience in doing business with
Japanese. Therefore, it needs to professionally train agent by sending them to learn in
the Japan so that they would have more knowledge in this market and distribution
system as well as law and customs.
Thirdly, many companies do not realize an importance of branding. Some
companies are successful in domestic market and even though foreign markets such as
Cambodia or Laos. These markets are easy because do not require so much from the
products. Almost they need are low price and acceptable taste. The distribution
system easily connects to the customer and product quality is at average level. But
that is different story in the Japanese market when this country needs more than that.
These companies who succeed in easy markets have met difficulties when exporting
to Japan. We cannot enter this market with unclear brand-name and the product
quality as well as taste based on other markets. The Japanese often put the trust in the
brand-name that they used to have experience with the products. Therefore, it is
important for Vietnamese enterprises to develop and improve their brand-name.
Advertising and putting the brand knowledge into the Japanese customers minds are
necessary through asserting the product quality and prestige of the company. In this
era, branding is key point to entering any market. Hence Vietnamese enterprises
should be aware of the importance of their brand and make it widely to the market.
Therefore, to push up exporting goods and services to Japan, the important
thing is to change the view of enterprises to the advertising. The company may
promote advertising activities through these formats below:
- The enterprise should have the fund to establish professional advertising
department about this field, training their agencies and empowering responsibility to
them.
- The enterprise should attend commercial exhibitions in Japan to
introduce their products to the Japanese so that they will have awareness of our
products. There are many advertising centers that Vietnamese companies may consult
such as: Area of International trade fairs Harumi in Tokyo, Kobe International
exhibition building, Western Japan General exhibition building
- Through the radio or television communication, Vietnamese companies
may widely advertise because this is a country where television was widely used, the
number of hours of television is quite high track. But if doing on this way may lead to
high costs for the companies, so it needs to weigh the pros and cons of advertisement
for important businesses. However, today we can advertise our products through the
internet. All companies can establish or make a website then put their products on the
website and introduce them to the Japanese customers. But more effectively is to have
62
the general forums for both Vietnamese and Japanese enterprises to know each other,
discuss and introduce goods as well as understand the market taste or cultural business
to each other. With the development of the internet, this is the economical way for all
enterprises of both countries to reduce the cost and make a first strong impression to
each partner. We also have some enterprise forums for trade between two countries
such as Kobe forum, thongtinnhatban.net, these forums will be the bridge to
connect enterprises together.
Besides, advertising by issuing proposals, labeling panels, posters at the
public places such as railway stations, tube stations, bus stops these actions are
good ways to supply information of our goods to Japanese customers.
When doing advertisement, enterprises should strongly emphasize the
advantages of our products. For example, advertising for silk commodity needs to
differently distinguished between silk products woven by hands of our country and
woven by machine with other countries, strongly stressing a point of sophistication.
As is really shown, there are many ways for the enterprise to self-advertise with
acceptable costs. In general trend, the advertising increasingly needs to be invested
properly when the difference in quality of the products is increasingly narrow.
Although imperfectly solve the problem is shown, but partly contribute it
does to push up the export goods from Vietnam to Japanese market. It is hoped that
these above solutions may be worthy for the enterprises then they could improved for
the commercial management to reach the potential power of both countries.
4.2.3.4. PRODUCT QUALITY DEVELOPMENT NOT HARM TO PEOPLE
HEALTHY
Besides reaching the credit of International standard organization, the
enterprise who export goods to Japan should also have reach the specific standard
requirement from Japanese market, those are Japanese industrial standards (JIS) and
Japanese agricultural standards (JAS). Therefore, to get these standards the company
needs getting information about these credits, reinvest in production and packaging as
well as choosing the materials and processing products clear-closed production. We
have to make our products fresh, hygienic and reduce toxic chemicals in the product
that under the Japanese standard allowance. The Japanese will boycott any product
that harms their health.
It is good example for Vietnam by the case of milk powder from China
that contained melamine toxic over the allowance of W.H.O, specifically Japan
standard that today Japanese has been boycott most of the milk powder come from
Chinese enterprises. Therefore improving the product quality will become survival
factor for any company who want to be successful in the Japanese market.
4.2.3.5. UPDATING THE INFORMATION OF JAPANESE MARKET AND
UNDERSTANDING BUSINESS CULTURE
63
This era is the era of information technology so on it is just a little delay

that may lead an important and precious signal which may bring benefits to the
enterprises becomes worthless. Hence, when joining into the global market, especially
competitive markets such as Japan, requires the enterprise continuously update
information related to their export activities.
There are many ways for enterprises to update the market information that
they need through the internet, TVs, daily newspapers, or doing market research and
closely associating in the field of foreign trade in Japan as well as Vietnam. These
organizations take a responsibility to supply the necessary information, changes in the
Japanese market situation to help Vietnamese enterprises to catch the demand of this
market and supply ability of Vietnam.
In Vietnam, the company can contact to the Japan External Trade
Organization (JETRO), Investment and Commercial Trading Center (ICTC), Japan
International Cooperation Agency (JICA). In Japan, enterprises can ask for the help
from Vietnam embassies or Asian - Pacific Trading Center (APTC) located in Osaka.
4.2.3.6. PROFESSIONAL TRAINING FOR STAFF IN THE EXPORT
DEPARTMENT
It is quite important to have strong staff that has ability to deal with
changing situations whole the worlds market. They also have to catch the exactly
information about changes in the demand, price in whole market and the reason that
make these changes as well as political, military, financial situation and policies
issued by the government. That is the only way to help the leader of the enterprises
timely to solve the problem before it spins out of the business control.
To corporate with the difficult and experienced country like Japan, it is
necessary to have professional staff in Japanese views because the Japanese have
historically known as the keen market expertise.
Fluently understanding Japanese language in particular or foreign language
in general not only help companies avoid regrettable mistakes while negotiating
contract, but also favorable condition to learn about the Japan as well as
understanding the needs of people in this market, making market access becomes
easier. The company also needs experts of information technology to exploit and
analyze the information collected or design advertising programs to make the product
more attractive on TVs, magazines or in the internet.
The important thing is that the agency staffs of the company have to put
the benefits of the whole company over their own personal interests. Moreover, they
should have good habits in routine record, following, researching and analyzing the
related information to the work and the product of their company. Understanding
general price situation, demand and supply happenings whole the world.
64
Generally, improving the qualifications of the working staff is as an

important essential requirement because the human is always a decisive factor in all
circumstances.
4.2.4. ECONOMIC GROWTH DEVELOPMENT:
At the macroeconomic, to push up the contribution to the increase of the
economic growth from the development of international trade between Vietnam and
Japan, economic growth as the increase of GDP itself has to rise up, support,
implement as well as supply basic factors for the trade relation. When GDP grows up,
it means that the productivity in producing domestic goods has been promoted. There
are four factors to determine the domestic productivity. And the improvement of these
factors may affect the increase of the productivity. Those are physical capital, human
capital, natural resources and technological knowledge. The following comments to
make factors above increase that will be explained in depth.
4.2.4.1. PHYSICAL CAPITAL is the stock of equipment and structures that are used
to product goods and services. And workers are more productive if they have tools
with which to work.
Improve and modernize working machines and tools to increase worker productivity
and cutting cost
More tools allow work to done more quickly and more accurately. With
the same knowledge and skill, a worker with only basic hand tools can make less
finished product per hour than a worker who works with sophisticated and specialized
equipment. It therefore should be improved and modernized the working machine or
tools and replaced the out of date or less effective ones to raise the standard of product
and service quality as well as productivity of the worker. In depth, the modern new
machines or tools will help to decrease the time for production of one item and partly
avoid the error when producing then make the production process more accurately. It
also reduces the cost of the product because of less error so that the product will easily
reach the consumer with the cheaper price. This is an advantage for the enterprise to
compete with others by cutting cost.
Improve product quality to push the brand value up
Moreover, the good attracts the consumer when it accurately made will
increase the product brand value for the company. If the customer recognizes the
positive change of products, they easily feel the attention from the enterprise to the
customers needs and trust then they are loyal to the companys products. This will
spread to the community and push the brand value up.
Logically working equipments and tools distributed to cut cost and avoid waste
Equipments and tools have to be logically allocated to the worker to
effectively use the full capability of the worker and make use of full capacity of these
65
devices. The working tool could not be given to the worker that without training them.
It wastes the money to invest in the machine but nobody professionally knows how to
use it.
Timely in value chains and avoiding loss by sooner reporting the problem
In addition, some inputs used to produce goods and services are produced
factor of production, which means that capital is an input into the production process
that in the past was an output from the production process. This considers the
continuous production chain thus the capital, which is the input of the next production
process should be finished on time to avoid the production delay. When any enterprise
meets the difficulty in physical capitals, as soon as possible they should notice to the
partner to find the solution or make a timely decision then they can prevent the loss
and bad situations.
4.2.4.2. HUMAN CAPITAL is the economists term for the knowledge and skills
that workers acquire through education, training, and experience.
Human capital improved by developing education techniques
Human capital includes the skills accumulated in early childhood
programs, grade school, high school, college, and on the job training for adults in the
labor force. Therefore the government should create favorable conditions for
developing education system such as changing teaching programs to reach the
international standard academy, encouraging foreign investors or even though
domestic investors to foundation schools with strict international standards that are
suitable to Vietnam education system.
Human capital improved by working and getting experience in the enterprise
Besides, companies should make good conditions for employees to
improve their skills and promote knowledge through frequent short-term business
training courses so that they can update the information and innovation flowing
throughout the world. More importantly, companies should pay attention to the future
potential labor force such as students. They should help the student early approach the
work and get experiences then the student themselves can orient their future career
which cannot be well done by the school. And I think students who have longer vision
and orientation in the future will work better than the other ones who are unclear
about their careers.
Increase the living standard of public teaching staffs as well as teaching programs
and school facilities to increase teaching quality
Also like physical capital, human capital is a produced factor of
production. Producing human capital requires inputs in the form of teachers, libraries,
and student time. Hence to increase the quality of the human capital, it should be an
increase of teaching, training and learning. With the Vietnamese situation about
66
treatments to public school teachers, it seems unfair salary and less support to the
public school teaching staffs from the government while they directly bring
knowledge to the future labor force.
The salary of public school teachers are same as manual labors one at the
basis while the teacher has used time and attempts to improve their knowledge. So the
government should raise the standard of living of the teacher by rising up their salary
as the higher speed of inflation certainly happened in our developing country. In the
future if the condition to the teacher unchanged, it would be brain drain process from
the public schools to private schools. This sounds good if one day the government
does not want to have public schools anymore and it is full of private ones then that
will be great completion among private schools to affirm the quality and
responsibility in teaching. Like that, learning conditions should be changed also.
Rural areas need more attention from the government to build the
education system as well as local economy to implement knowledge for the local
people and encourage them to go to school by convincing them that studying is the
best way to overcome the poverty and get the better life.
4.2.4.3. NATURAL RESOURCES are inputs into production that are provided by
nature, such as land, rivers, and mineral deposits. There are two forms: renewable and
nonrenewable.
Renewable natural resource
To the renewable natural resource, we should take advantage of lands and
power of river. Cause the world population increase day by day, so each government
has to prepare for the master plan to build houses and building to serve the daily
operation of human without harming to the environment of ourselves and other
species. The government has to have specific planning in residential areas, industrial
areas, mining areas, real estate service areas. What land is suitable for people to live,
which is good for agricultural activities, which we use to store the machine for
manufacture, which are used to exploit and supply raw materials for human
production activities such as rare soil, coals, oils, clays, metals, rocks, and which
one we have to protect and preserve because it provides basic living conditions for us
such as Worlds green lungs: Amazon jungle and are the place of animals and
organisms lives like Amazon jungle, African national parks, tropical jungles in Asia,
primeval forests in America and Europe in the overall picture of humanity.
Besides, exploiting and fishing capacity under the water in the sea and
river must be done in parallel with marine aquaculture to preserve aquatic species and
keep food for the future. Therefore, it is quite important to reasonably use the natural
resource and we have to protect them from over exploitation.
+ Firstly, we have to preserve them.
67
+ To rivers and forests which have not been polluted or cut down, we have
to restrain enterprises spill wastes into the water or overexploit wood by cutting down
the tree. These actions will distribute living environment of us and around us. This
will affect the future generation.
+ To the polluted river, we have to limit amount of waste into them while
investing more in machinery and technology to filter waste before placing them in the
river flow.
Nonrenewable natural resource
To the nonrenewable natural resource such as oils, rare soil and coals to
the production process, sooner or later they will reduce the number and it takes very
long time to recovery, and as predicted, worlds economy will face the terrible news.
Therefore enterprises and even though the government need to deeply do research and
create artificial materials and fuels to gradually replace existing ones. Solar energy is
the good example and good way to save the energy. Many high building wisely uses
glasses that absorb solar energy then these energies are converted to electric current to
supply electricity for whole building. We should more restrain to be dependent on
original fuels and materials.
4.2.4.4. TECHNOLOGICAL KNOWLEDGE is the understanding of the best ways
to produce goods and services. It explains how the world works. So the best way for
Vietnam today is to learn and import technology from other developed countries such
as Japan, Taiwan, U.S, France, England to apply in the manufacture of the country.
Besides, Vietnam continuously update information about technology and
try more attempts to catch the world technological knowledge. To do this:
+ Vietnam firstly invests more in the education system for developing the
knowledge of the student so on these potential students will confidently contribute
their capability to create the technology and bring global knowledge to our country.
+ Secondly, Vietnam leapfrogs technology, using promoted and developed
technology to deeply do research green technology. I means that the future technology
with the reduction of dust, toxic waste and original fuels and materials. Hence,
Vietnam should limit to import old and out of date machines and technology. This
will prevent the development of the enterprise under a certain aspect because of high
investment in these machines.
However, in the recent time to developing the domestic economy, Vietnam
has to import old ones from other countries that they deserted. It cannot be avoided to
do this because the Vietnams economy is on the first and basic step compared to
other ones and Vietnam also have a lack of experience as well as budget to do more.
So on today Vietnam has to go along with the young manufacture to find the way to
on priority stand on global economics to earn the experience and learn technology,
mainly capitals from doing business. But in the future when the education of Vietnam
68
meets the high level of standard, Vietnam itself will have creation of technological
knowledge that the global have to follow.
69
LIST OF REFERENCES
[1]. Cateora, Gilly, & Graham. International Marketing (fourteenth ed.).
[2]. Hip, D. P., & H, V. V. (2004). Quan h kinh t Vit Nam - Nht Bn trong bi
cnh quc t mi. Hanoi: Khoa hoc xa hoi.
[3]. Mankiw, N. G. Principle of Economics (second ed.).
[4]. Paul G. Keat, P. K. Y. Y. (2006). Manangerial Economics: Economic Tools for
Todays Decision Makers (fifth ed.): Pearson, Prentice Hall.
[5]. Th, T. V. Bin ng kinh t ng v con ng Cng nghip ha Vit Nam.
Ho Chi Minh: Tre.
[6]. Vietnam, S. (2004). Vietnam statistical data in the 20th century. Hanoi: Thong
Ke.
[7]. Balasubramanyam, V. N., & Sapsford, D. (Eds.). The Economics of International
Investment.
[8]. Vit Nam - Nht Bn hon tt m phn EPA. (2008). VNN news.
[9]. Hnh thnh khu vc thng mi t do song phng Vit-Nht. (2011). Dantri
news.
[10]. Nguyen, N. (2011). Thm ha Nht nh hng kinh t Vit Nam. RFA.
[11]. Veno. (2010). Quan h thng mi Vit Nam - Nht Bn: vt th thch, n c
hi. www.saigon3.com.vn
Other information:
[12]. Available from Information Center - Agriculture and Rural development
www.argo.gov.vn
[13]. Available from Vietnam business and economy news
www.vneconomynews.com
[14]. Available from Vietnam catfish export groups www.pangafish.com
[15]. Available from Vietnam's Chamber of Commerce and Industry
www.vcci.com.vn
[16]. Available from Bureau of Statistics www.gso.gov.vn
[17]. Available from Vietnam's Customs www.customs.gov.vn
70

The International Trade Between Vietnam and Japan

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

The International Trade Between Vietnam and Japan

Загружено:

Авторское право:

Доступные форматы

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

THE INTERNATIONAL UNIVERSITY

Advisor: Phd. Ho Nhut Quang

INTERNATIONAL TRADE BETWEEN VIETNAM AND JAPAN

H Nht Quang, Ph.D

H Nht Quang, Ph.D

H Nam Khnh Giao, Ph.D.

L nh Minh Tr, MBA.

Trn Tin Khoa, MBA.

First and foremost, I would like to show my sincere gratitude to my

1.4. IMPLICATION OF THE STUDY:

1.6. METHOD OF STUDY:

Comparative advantage was first described by Robert Torrens in 1815 in

The 222 model

Differences in labor abundance would not produce a difference

There are limited exchange controls

Foreign Direct Investment (FDI) is permitted between countries, or

Figure 1.1: Aggregate demand and aggregate supply

where Y is real GDP, M is the nominal money supply, G is

Aggregate supply curve

Where W is the nominal wage rate (exogenous due to stickiness in the

Shifts of aggregate supply

An exogenous decrease in the wage rate

An increase in the physical capital stock

Technological progress improvements in our knowledge of

An increase in the physical capital stock

In that, (IM-EX) is the trade surplus or trade deficit. Therefore, AD can be

Table 1.1: Annual GDPs growth rate in Vietnam

(Source: Bureau of Statistics)

promoted spending from government to build better infrastructures, encouraged

GDP = a + b0 C + b1 I + b2 G+ b3 FDI + b4 P + b5 VNJP + b6 VNOT + c

independent variables do not impact on dependent variables, and multicollinearity

METHODOLOGY, RESULT AND DISCUSSION

In this chapter, it will be discussed about the international trade between

3.1. THE INTERNATIONAL TRADE BETWEEN VIETNAM AND JAPAN IN

Moreover, Japan is world leader in the field of scientific research,

In November 1992, Japanese government decided to aid Vietnam again,

Table 3.1: Export-Import of Vietnam with Japan since 1988 to 2010

3.1.1.3. TRADE BALANCE BETWEEN VIETNAM AND JAPAN FROM 1988

(Source: Bureau of Statistics) (Unit: USD)

(Unit: millions USD)

Vietnam and other countries

Due to the economic development, Vietnam always was always in trade

(Source: Bureau of Statistics) (Unit: millions USD)

3.1.1.5. THE RELATION BETWEEN THE GROWTH RATE OF THE TRADE

3.1.2.1. VIETNAMS COMMODITIES WITH HIGH EXPORT VALUE TO

Woods commodities are always highly respected by Japanese market.

Machinery, equipment, tools and accessories

Figure 3.7: Export proportion of important commodities of Vietnam to Japanese

3.1.2.2. Important Vietnams import commodities from Japan:

Figure 3.8: Import proportion over total import turnover of Vietnam

(Source: Bureau of Vietnam customs) (Unit: USD)

Beside that automotive components and accessories imports significantly

3.1.3. CURRENT ISSUES AND ADVANTAGES IN TRADE BETWEEN TWO

Quality, cost and delivery requirement

important if Vietnamese companies want to sell their products without understanding

Lack of information about Japanese market

misunderstanding gestures. The leader of small and average enterprises in Vietnam

Vietnam officially became a member of WTO, committing to cut the

3.2. MAIN FINDING OF THE THESIS: THE IMPACT OF INTERNATIONAL

3.2.1. RUNNING REGRESSION EQUATION:

The equation is:

When testing the combination of variables, we get two possible normal